The Treasury Department issued new preliminary guidance Tuesday to help guide industries and service providers in the United States as they prepare for the implementation of a Russian oil price cap slated to take effect next month.
The determination authorizes U.S. businesses to provide certain services related to the maritime transport of Russian oil so long as it is purchased at or below the capped price.
The cap, which is meant to limit Russia’s funding for its war in Ukraine without increasing oil prices, is backed by an international coalition including G-7 nations, the European Union, and Australia. Senior Treasury Department officials said Tuesday that the U.S. is also working with allies to finalize a price for the cap, which will be announced in the coming days.
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The services include trading, class commodities, brokering, financing, shipping insurance — including reinsurance and protection and indemnity — flagging, and customs brokering.
Treasury officials said the new guidance is an effort to demonstrate to industry and to market participants that the U.S. is working to align with the other members of the price cap coalition on the implementation of the cap.
“Our guidance set out clear, simple expectations for all categories of service providers covered by the determination,” senior Treasury officials told reporters Tuesday.
The U.S. also introduced a “safe harbor” provision making clear that U.S. service providers who comply in good faith with the oil price cap guidance do not face penalties.
Treasury officials said they will revisit the price cap as necessary to ensure it reflects current market dynamics, ideally on a quarterly or semiannual basis, to ensure the cap is accomplishing its two goals, which is trying to reduce Russian revenue while at the same time allowing exports to continue to flow.
Going forward, Russia “will have two options,” Treasury officials said.
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They can either sell the oil underneath the price cap and use Western services, or Russia can find alternative buyers.
