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| 1 minute read

OFAC issues alert on possible evasion of Russian oil price cap

On April 17, the U.S. Office of Foreign Assets Control (OFAC) issued an alert warning about possible evasion of the price cap on Russian-origin oil. Specifically, OFAC is aware of reports that oil exported from ports on Russia’s eastern coast or through the Eastern Siberia Pacific Ocean (ESPO) pipeline is trading above the price cap.

Under the existing sanctions, U.S. persons may not provide certain services related to the maritime transport of Russian oil unless the oil was purchased at or below the established price cap. The prohibited services include trading/commodities brokering, financing, shipping, insurance, flagging, and customs brokering.

The alert identifies two evasion concerns:

  1. Tankers may be manipulating their Automatic Identification System (AIS) to disguise their ports of call or ship-to-ship transfers of Russian-origin oil.
  2. Counterparties may be refusing to provide documentation showing oil and petroleum products were purchased at or below the price caps. Instead, they may attempt to claim the difference between the price cap and the total price is shipping, freight, customs, and insurance costs, which are not included in the price caps.

OFAC recommends ship owners, protection and indemnity clubs, and flagging registries:

  • Disseminate the alert to counterparties and members;
  • Use maritime intelligence services to improve detection of AIS manipulation; and
  • Consider AIS manipulation disguising a tanker’s port of call in Russia to be evidence of possible price cap evasion.

For commodities brokers and oil traders, OFAC recommends requiring counterparties to produce an invoice, contract, or receipt showing the actual price of the Russian-origin oil or petroleum products. Shipping, freight, customs, and insurance costs should be invoiced separately. If the broker or trader is unable to secure clear documentation, it may not satisfy the safe harbor requirements outlined in OFAC’s price cap implementation guidance. As a result, the broker or trader could be subject to an enforcement action by OFAC for violating the price cap.


James Willn, Paula Salamoun, Ozra Ajizadeh


international trade, sanctions, russia, national security, trade, ofac