Crude Oil and Petroleum Price Cap: On September 2 2022, the G7 Finance Ministers issued a statement demonstrating their intent to implement a price cap on Russian-origin crude oil and petroleum products. The G7 countries plan to prohibit the provision of services that enable maritime transportation of these products unless the products are purchased at or below the price cap. The price cap will be set based on a range of technical inputs and will be decided upon by the countries participating in the regulation. The G7 Finance Ministers explained that the purpose of the price cap is to reduce Russian revenues and Russia’s ability to fund the war in Ukraine while limiting the impact on energy prices. The G7 indicated that it will seek a broad coalition of countries to adhere to and implement the price cap.
U.S. Secretary of the Treasury, Janet L. Yellen, issued a statement on the price cap praising the G7’s commitment, and emphasizing the impact the price cap could have on Russia’s ability to fund the war in Ukraine. Treasury announced that OFAC anticipates publishing preliminary guidance regarding the price cap this month, which will provide a high-level overview of the price cap regime, including how U.S. persons can comply, in advance of to-be-issued formal guidance and legal implementation.
Russia Sanctions: This week the United States designated Safiran Airport Services, an Iranian company, under Executive Order (“EO”) 14024 for providing drones to Russia for its war on Ukraine. Additionally, the United Kingdom made four amendments/corrections to designated individuals and entities. The updates corrected Cyrillic names and added an “also known as” (“aka”) name.
General Licenses: The United States issued general license (“GL”) 13b which supersedes GL 13a. The GL allows U.S. persons and entities owned or controlled by U.S. persons to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, or certifications otherwise prohibited by Directive 4 under Executive Order 14024. This exemption only applies when the transaction is ordinarily incident and necessary to the U.S. person or entity’s day-to-day operations in the Russian Federation. The new GL extends the validity of the exemption until December 7, 2022. It was originally set to expire on September 30, 2022.