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- The price cap will be implemented in the UK and coalition jurisdictions from 5 December 2022.
- Third countries will only be able to access services such as insurance, shipping and brokerage from coalition countries if they trade Russian oil at or below the cap.
- The UK and its coalition partners will not use the cap, as they have already introduced an import ban on Russian oil.
The UK, in partnership with G7 countries, Australia and the European Union, today agreed to set a price cap of $60 for Russian crude oil traded by companies shipping oil to third countries. This price will be kept under review. The UK and its coalition partners will only facilitate sea transport of Russian oil if companies trade at or below this cap.
G7 finance ministers agreed to a cap in September as a way to undermine Putin’s ability to fund a war in Ukraine through global oil prices, while ensuring third countries can continue to secure affordable oil.
A general license will soon be published that will provide an oil price cap exception for third countries, so that companies supplying them with oil can continue to receive services from coalition countries after December 5, but only if Russian oil trades at or below the cap.
Insurance is one of the key services that enables the transport of oil by sea, particularly protection and indemnity (P&I) insurance which deals with third-party liability claims – the UK is the global leader in the provision of P&I cover, writing 60%. Global cover written by international group P&I Club.
To align with the EU timeline for parallel measures, the measures on services facilitating maritime transport of refined oil products will come into effect on 5 February.
Chancellor Jeremy Hunt said:
As long as Putin’s war continues, the UK will stand with Ukraine and its people. We will not waver in our support and we will continue to find new ways to stem Putin’s funding flows wherever we can.”
United States Treasury Secretary Janet Yellen said:
“Together, the G7, the European Union and Australia have now jointly set a cap on the price of offshore Russian oil that will help us achieve our goal of limiting Putin’s primary source of revenue for his illegal war in Ukraine while maintaining the stability of global energy supplies. .Today’s announcement is the culmination of months of effort by our coalition and I appreciate the hard work of our partners in achieving this result.”
Treasury has set up a new team to implement the scheme, based in the Office of Financial Sections Implementation. The team will set up a licensing and enforcement system for the oil price cap; engage with industry to ensure readiness for the cap; and monitor the level and effectiveness of the cap on an ongoing basis.
More information
- The legislation, introduced on November 3, is a statutory instrument made under the Sanctions and Anti-Money Laundering Act 2018, amending the Russian (Sanctions) (EU Exit) Regulations 2019.
- A general license will be issued on 4 December which will provide an oil price cap exception to the law and enable UK services to continue to transport crude oil of Russian origin from 5 December and refined oil products from 5 February. Location between third countries and third countries in Russia when oil is purchased at or below the price cap level.
- General guidance on the operation of the UK ban and cap was published on 14 November and will be updated on 4 December – this is being followed up with a program of industry engagement events and opportunities.
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