Prior to an anticipated price restriction in early December, the Treasury Department updated its instructions on Tuesday about regulations governing the maritime transit of Russian oil.
The guidelines explain how U.S. service providers can continue transporting Russian seaborne oil that was loaded before December 5 while adhering to a strategic price cap on that oil developed by the G7 nations, the E.U., and Australia. They are intended to complement the U.K.’s recently released policies.
The goal of the so-called Price Gap Coalition is to deny Russia a source of revenue so that it cannot prolong its conflict with Ukraine.
In order to put the pricing gap policy into effect, a senior Treasury official told reporters on Tuesday that the department anticipates similar instructions from other coalition nations in the coming days.
The official stated: “We’re taking these efforts to make it as simple as possible for market participants to implement the price cap policy as of December 5 keeping with the coalition’s goals of enabling Russians to maintain the flow of foreign oil while reducing the Kremlin’s income.”
An executive order addressing the marine transportation of Russian oil includes numerous services that are covered, including shipping and customs brokering.
According to the guidelines, service providers would not face financial repercussions for transporting Russian-origin crude oil that is loaded and exported before midnight ET on December 5 and discharged at the target port by midnight ET on January 19.
A “safe harbour” from enforcement is also described in the guidance for providers who use a recordkeeping and attestation process to prove the oil was bought at or below the price cap.
The regulation, which goes into effect on December 5, prohibits imports of Russian oil into the United States.
Treasury officials claimed they had already observed indications of the product being diverted from markets in the United States and Europe, which are no longer interested in purchasing Russian oil.
According to an official, “I believe the last count showed less than 90,000 barrels of oil were still travelling to Europe at this time.”
By the following year, Russian oil production is anticipated to drop to 1.4 million barrels per day.
The Price Control Coalition has not yet decided how much to cap the price of oil, but the guidance states that the cap will be chosen following a “technical exercise” carried out by the coalition.
‘In the next days,’ a senior Treasury official said, the decision will be taken.