On February 3, 2023, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published a determination pursuant to sections 1(a)(ii), 1(b), and 5 of Executive Order 14071 and a determination pursuant to section 1(a)(ii) of Executive Order 14071 (“Determinations”) to implement the price cap policy for Russian petroleum products, building on earlier determinations related to Russian crude oil. OFAC also issued an updated guidance document relating to the price cap policy for Russian crude oil and petroleum products, and amended and reissued two related General Licenses. Please see the related press release here.
Building on earlier prohibitions related to Russian crude oil, the Determinations prohibit the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a US Person of the following covered categories of services as they relate to the maritime transport of Russian petroleum products (“Covered Services”):
- Trading/commodities brokering;
- Insurance, including reinsurance and protection and indemnity;
- Flagging; and
- Customs brokering
The Determinations took effect at 12:01 a.m. eastern standard time on February 5, 2023. Similar determinations pursuant to Section 1 (a)(ii) of Executive Order 14071 were issued in November 2022 targeting the Russian crude oil sector. Please see our blog posts here.
Updated Price Cap Guidance
Previously, OFAC issued guidance regarding Russian crude oil, and this guidance was updated to include petroleum products pursuant to the Determinations. The updated guidance expands upon OFAC’s November 2022 guidance and supplements the September 2022 preliminary guidance; please see our blog posts here and here for more details related to previous OFAC guidance.
Amended General Licenses
The following General Licenses were amended and reissued to include Russian petroleum products within the scope:
- General License 56A (“GL 56A“) authorizes transactions related to the importation of Russian crude oil and petroleum products into Bulgaria, Croatia, or landlocked European Union Member States as described in Council Regulation (EU) 2022/879 of June 3, 2022. There is no expiration date for GL 56A.
- General License 57A (“GL 57A“) authorizes transactions that are ordinarily incident and necessary to addressing vessel emergencies related to the health or safety of the crew or environmental protection, including safe docking or anchoring, emergency repairs, or salvage operations, subject to conditions. There is no expiration date for GL 57A.
The authors acknowledge the assistance of Ryan Orange with the preparation of this blog post.