US Dept says price cap on Russian oil not for deep-processed oil

WASHINGTON/MOSCOW, Nov 23 (PRIME) -- The price cap on Russian oil by an international coalition, including the G7, the U.S., the European Union, and Australia will not apply to oil deeply processed beyond the state, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) said in a guidance on the implementation of the price cap policy for crude oil of Russian origin on Wednesday.

“Once crude oil is substantially transformed… in a jurisdiction other than the Russian Federation, it is no longer considered to be of Russian Federation origin, and thus the price cap no longer applies,” the document read.

For crude oil of Russian Federation origin, the price cap takes effect at 12:01 a.m. eastern standard time on December 5, according to the document.

The document does not authorize the import of Russian oil into the United States, which was prohibited earlier, the document also read.

Marine shipments of crude oil from Russia’s Sakhalin-2 project to Japan are allowed until September 30, 2023. All financial transactions linked to Russian oil imports to Bulgaria, Croatia and inland members of the E.U. are allowed.

The document also allows transactions with Russian oil that are ordinarily incident and necessary to address vessel emergencies related to the health or safety of the crew or environmental protection, including safe docking or anchoring, emergency repairs, or salvage operations.

The price cap for Russian oil will be set after a technical exercise conducted by the price cap coalition.

Bloomberg reported citing sources and a document that the price cap for Russian oil can be set above the previously discussed interval of U.S. $40–60 per barrel.

Bloomberg also reported that the E.U. proposed a 45-day transitional period for the implementation of the price cap mechanism.

“The bloc proposed adding a 45-day transition to the introduction of the cap, according to a document seen by Bloomberg. The proposed grace period would apply to oil loaded before December 5 -- the date oil sanctions are due to kick in -- and unloaded by January 19, 2023, aligning the E.U. to a clause previously announced by the U.S. and the U.K.,” it reported.

E.U. ambassadors are scheduled to meet on Wednesday with the aim of approving the cap, Bloomberg added.

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