On 12 October 2023, the Price Cap Coalition (Australia, Canada, the European Union, France, Germany, Italy, Japan, the United Kingdom, and the United States) renewed efforts to ensure effective enforcement of the price cap on Russian-origin oil and petroleum products. Below we summarize the Price Cap Coalition’s joint advisory for the maritime oil industry and other actions taken by the United States.
Maritime Oil Industry Advisory
The Price Cap Coalition issued an advisory providing seven recommendations concerning specific best practices in the maritime oil industry. The advisory was issued to promote responsible practices in the maritime oil industry and enhance compliance with the price caps on Russian crude oil and petroleum products.
The advisory lists several compliance and due diligence recommendations for the maritime oil industry, which include monitoring high risk ship-to-ship transfers and reporting ships that trigger concerns of illicit maritime oil trade. The advisory also recommends maintaining continuous maritime insurance coverage for voyages and to make sure the insurer can cover all relevant risks. The Price Cap Coalition encourages industry stakeholders to ensure counterparties receive classification from International Association of Classification Societies member classification societies to ensure vessels are fit for the service intended. The advisory includes various risks related to “shadow” maritime oil trade.
In addition, the Price Cap Coalition issued a joint press release regarding the advisory. In the joint press release, members of the Price Cap Coalition say they will “respond in accordance with the respective restrictive measures” to companies or persons that have engaged in illicit practices related to shipments of Russian-origin crude oil and petroleum products.
US Specific Updates
The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) added two entities based in Turkey and the United Arab Emirates, along with their two vessels, to the Specially Designated Nationals List (“SDN List”) for transporting Russian oil sold above the global price cap set by the Price Cap Coalition. OFAC also issued General License No. 73, authorizing certain “limited safety and environmental transactions” involving the two designated companies and their vessels, through 12:01 a.m. eastern standard time, January 8, 2024. This general license includes various limitations, including a requirement that payments to the SDNs be made into a blocked account.
US Persons are generally prohibited from dealing, directly or indirectly, with SDNs, entities that are owned 50% or more by one or more SDNs, and their property or property interests. Non-US persons can be held liable for “causing” violations by US Persons involving transactions with SDNs and can also be subject to secondary sanctions risks for providing “material support” to SDNs. Secondary sanctions risks include the risk of being designated as an SDN. OFAC issued this press release on the new designations.
The authors acknowledge the assistance of Ryan Orange with the preparation of this blog post.
