The U.S. Department of the Treasury has announced a tightening of the price cap on Russian oil, in addition to introducing new sanctions on Russia and its partners.
A document published by the Treasury stipulates that a price cap applies to Russian oil and petroleum products when they are transported via maritime routes, excluding onshore sales. Once these products have cleared customs in a jurisdiction other than the Russian Federation, the cap does not apply to further onshore sales. For Russian crude oil that is processed in a jurisdiction other than the Russian Federation, it is no longer considered of Russian origin and thus, the price cap no longer applies. Refiners in jurisdictions that have not banned Russian oil imports can purchase crude oil at or below the price cap and rely on U.S. service providers for services related to maritime transport.
In a press release by the U.S. Department of the Treasury, it was revealed that since the imposition of the price cap, major Russian oil companies have utilized little-known oil traders to ship over half of Russia's oil exports. Bellatrix Energy Limited and Covart Energy Limited, two Hong-Kong based companies, have rapidly increased their share of Russia's oil since the implementation of this policy. Bellatrix Energy has made more than 150 port calls in Russia, trading tens of millions of tons of crude oil with Russia. Covart Energy has made 23 port calls since the implementation of the price cap and currently possesses a Russia-flagged vessel. These trades have provided Russia with hundreds of millions of dollars.
Deputy Secretary of the Treasury Wally Adeyemo said: "Today’s designations demonstrate our commitment to upholding the principles of the price cap policy, which advance the goals of supporting stable energy markets while reducing Russian revenues to fund its war against Ukraine." He added: "Participants in the maritime transport of Russian oil, especially Tier 1 actors like traders, must adhere to compliance guidelines agreed upon by the Price Cap Coalition or face the consequences."
