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U.S. Treasury Dept. Issues Warning About Buying Russian Crude Above Price Cap

  • U.S. Treasury Department:  ESPO and other crude-oil exports may be trading above the $60-per-barrel price cap imposed by Western countries.
  • OFAC issued an alert addressing possible price cap evasion, naming Kozmino as one of the ports where Russian oil may be trading above the cap
  • OFAC said some tankers may be manipulating their automatic identification systems, a practice known as "spoofing,".
Kozmino

The U.S. Treasury Department has published a warning to U.S. companies about possible evasion of a price cap on exported Russian oil, pointing specifically to oil exported through the Eastern Siberia Pacific Ocean (ESPO) pipeline and ports in eastern Russia.

The department's Office of Foreign Assets Control (OFAC) said on April 17 it was aware of reports that ESPO and other crude-oil exports may be trading above the $60-per-barrel price cap imposed by Western countries.

OFAC issued an alert addressing possible price cap evasion, naming Kozmino as one of the ports where Russian oil may be trading above the cap and saying U.S. entities may unwittingly be providing services for those trades.

"These U.S. service providers may be unaware that they are providing covered services involving Russian oil purchased above the price cap, as the non-U.S. persons involved in the exports may have provided incomplete or false documentation or used other deceptive practices," OFAC said.

Under the price-cap scheme, companies based in G7 countries and in the European Union are allowed to provide financial services such as transportation, insurance, and financing for Russian oil and oil products only if they are sold above $60 per barrel.

The price cap was agreed in December as a way to keep Russian oil on the market while reducing oil revenue earned by Russia that could then be used to fund its war in Ukraine.

The U.S. Treasury Department in February published guidance on the implementation of the price cap policy for both Russian crude oil and Russian petroleum products.

The department referred to the guidance in its alert on April 17, stressing that U.S. persons providing covered services "are required to reject participating in an evasive transaction or a transaction that violates the price cap determinations, and to report such a transaction to OFAC."

OFAC said some tankers may be manipulating their automatic identification systems, a practice known as "spoofing," to disguise having called at the port of Kozmino, which is about 85 kilometers southeast of Vladivostok, or other ports on Russia's eastern coastline.

"For example, basic vessel-tracking data may show the tanker at one location, but more sophisticated reporting from maritime intelligence services may show that the vessel called at the port of Kozmino or another eastern port in the Russian Federation," OFAC said.

Spoofing can also be used to mask ship-to-ship transfers carried out to disguise the origin of Russian oil.

OFAC warned that U.S. persons providing services covered by the price cap should view manipulation of the identification system that disguises a tanker's port of call in Russia as evidence of possible evasion of the price cap.

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By RF/ERL

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