Oil Price Cap Teach-In

Office of Financial Sanctions Implementation, HM Treasury

 Context

The UK and coalition partners have agreed tough and comprehensive sanctions on Russia’s most
lucrative export: crude oil and refined oil products.
We have banned the import of Russian oil and oil products into our markets, and we have further banned UK
services including finance, insurance and shipping from enabling the maritime transport of Russian oil and oil
products globally (“the services ban”).

19 January 1 April
2023 2023
Price cap on Price cap on Updated
crude oil Crude oil refined oil Oil products guidance, based
comes into wind-down comes into wind-down on industry
force. period force. period engagement.
5 December finished. 5 February finishes.
April 2023
2022 2023
 The Oil Price Cap: how does it work?

Entities that provide services to enable the shipping of
Russian oil and oil products at or below the price cap
will be supporting the Coalition’s objectives to
constrain Russia’s war machine while maintaining oil
flows globally.
Price Cap Levels
The level of the price caps will be reviewed bi-monthly. As of
28 February 2023, these are:
• Crude Oil – $60
• Discount to crude (e.g. fuel oil) – $45
• Premium to crude (e.g. diesel and gasoline) – $100

Goods in Scope
The Maritime Services prohibition and oil
price cap applies to those goods which
fall under HS headings 2709 & 2710 –
from the point at which cargo is received
on a ship.
Goods are no longer subject to the price cap once they have been delivered and passed through customs controls
in a third country. However, substantial processing in a third country is required for the goods to no longer be
subject to the price cap if they re-enter trade by ship.
Licences & Exceptions

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 Exceptions and Specific Licenses
Exceptions
Emergencies: The prohibitions will not apply to any person performing an act that
assists with the urgent prevention or mitigation of an event likely to have a serious
and significant impact on human, health or safety, infrastructure, or the
environment. Notify within 5 working days (form on gov.uk).
Third-country oil: Non-Russian origin oil and/or products which are not owned by a
person connected with Russia, and only being loaded in, departing from, or
transiting through Russia.

Licences
Where a transaction involves Russian oil and/or oil products purchased above the
price cap, you may be able to obtain a specific licence to permit this activity where it
would otherwise breach sanctions. Currently there is only one licensing ground that
would be permitted – extraordinary situations.
• The situation must be extraordinary in nature (unexpected, unavoidable, and
not recurring).
• This ground applies to non-UN designated persons and enables anything to be
done to deal with an extraordinary situation. This will enable a situation which is
extraordinary in nature but does not necessarily involve an expense.
 Reporting
• Overview of Reporting Requirements
• Reporting Frequency & Record-Keeping

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 Reporting requirements under the OPC GL

OFSI Approach to Reporting

General Licence INT/2022/2469656, and the wider OPC General Licences, take a proportionate approach to
reporting requirements. There are different responsibilities for Providers in each Tier, and subject to the type
of activity they are undertaking.

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 Reporting Frequency & Record-Keeping

Consolidated Reporting Frequency – Tier 1 Providers Case Study: Consolidated Reports

As Tier 1 Providers must report all their activity under the • March 8th: Transactions 1 & 2
General Licence, this means a report should be provided for • March 14th: Transaction 3
each transaction - including where multiple transactions are
• March 28th: Transaction 4 & 5
covered by one contract.
• March 30th: Transaction 6
This must be submitted to OFSI within 40 days.
For the above transactions, the deadline for
However, to reduce the administrative burden, multiple
a consolidated report would be 17th April
transactions in a 30-day period can be reported to OFSI in a
(March 8th + 40)
single report (example right) so long as this is submitted within
the 40 day deadline for each of the transactions included.

Withdrawal of Services
Where a UK Tier 1 Provider does not provide confirmation to Tier 2/3 counterparties that they have reported to
OFSI, the Tier 2/3 Providers must withdraw their services as soon as reasonably practicable – and report this to OFSI
within 60 days of requesting this confirmation.

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Enforcement
• Overview of OFSI’s Approach to Civil Enforcement
• Breaches of Sanctions

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 OFSI’s Approach to Civil Enforcement
Overview of OFSI Compliance and Enforcement
OFSI enforces the UK Maritime Services Prohibition and the Oil Price Cap through a robust civil enforcement
regime – which is backed up by a criminal prosecution option. Enforcement action in response to a breach is
determined on a case by case basis, with the objective of ensuring that outcomes are fair, proportionate, and
best enforce the purpose of the UK’s sanctions regime.

Available Enforcement Actions

OFSI may take a number of actions in response to a breach, including:
• Issuing a warning letter;
• Referral of professionals to their relevant regulatory body;
• Publish information pertaining to a breach, irrespective of a monetary penalty, where in the public
interest to do so;
• Impose a monetary penalty; and
• In certain cases, refer the case to law enforcement agencies for criminal investigation and potential
prosecution.
 Breaches of Sanctions

Approach to Circumvention
It may be considered to be a criminal offence if activity is undertaken or participated in with the intention of
circumventing the UK Maritime Services Prohibition and/or Oil Price Cap.
Please ensure that when completing the suspected breach reporting form, you believe that the facts and
information provided are accurate and true to the best of your knowledge.
Reporting a Breach of Sanctions
Where a breach has been committed, involved persons are legally obligated to report this to OFSI – failure to
do so is considered a criminal offence.
Reporting a Suspected Breach
Those who have knowledge or suspicion of a suspected sanctions breach related to the maritime services
ban and oil price cap are also required to report this to OFSI - a suspected breach reporting form can be
found on the OFSI gov.uk site.

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Q&A

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