Following Russia’s unprovoked invasion of Ukraine in February 2022, the United States imposed several measures against Russian oil products in an attempt to reduce the flow of oil revenues to Russia while also fighting rising energy prices worldwide. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) previously banned the importation of Russian oil into the U.S. and prohibited investment in the Russian energy sector. On September 2, 2022, the United States, together with other G7 members — Canada, the European Union, France, Germany, Italy, Japan, and the United Kingdom — officially announced a plan to cap the price of Russian crude oil and petroleum products. Pursuant to this plan, the provision of services supporting maritime transportation of Russian oil and related products (“seaborne Russian oil”) will be permitted only where such products are sold at or below the price cap. According to the G7 finance ministers’ statement, the price cap is expected to build on and amplify the reach of existing sanctions coordinated among Western allies, including, most notably, the European Union’s (EU) June 2022 prohibition on insuring or financing the maritime transport of crude oil or petroleum products from Russia to third countries.
On September 9, 2022, OFAC issued “Preliminary Guidance on Implementation of a Maritime Services Policy and Related Price Exception for Seaborne Russian Oil” (Preliminary Guidance). The Preliminary Guidance provides that the ban (the “maritime services policy”) will cover a broad range of services (not yet defined) related to maritime transportation and will take effect on December 5, 2022, for maritime transportation of crude oil, and on February 23, 2023, for maritime transportation of petroleum products. The price cap for seaborne Russian oil has not yet been established and will be set by consensus among the coalition of countries implementing the policy.
In the U.S., the maritime services policy will be enacted pursuant to Executive Order (EO) 14071, which authorizes the prohibition of certain services to the Russian Federation by U.S. persons. Importantly, the existing U.S. prohibition on the importation of Russian crude oil and petroleum products (at any price) under EO 14066 will remain in place. The maritime services policy applies to the provision of services by U.S. persons related to the maritime transportation of seaborne Russian oil to countries other than the U.S.
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.
Attorney Advertising—Sidley Austin LLP, One South Dearborn, Chicago, IL 60603. +1 312 853 7000. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships, as explained at www.sidley.com/disclaimer.
© Sidley Austin LLP