In a first, US admits Russia can evade oil price cap

The United States has acknowledged that Russia can circumvent the oil price cap set by the Group of Seven (G7) countries, its treasury department said in an alert published on Monday.

The US Treasury’s Office of Foreign Assets Control (OFAC) said that Russian oil exported via Pacific ports in Russia, such as Kozmino, may be trading above the USD 60 price cap and may be using covered services provided by US persons.

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

It mentions two common schemes used by Russia to circumvent the oil price cap:

‘Spoofing’, or manipulating Automatic Identification Systems (AIS) data with powerful transmitters that distort tanker signals and disguise the exact location of the tanker

Obfuscation, whereby oil shipping, freight, customs, and insurance costs – which are not related to the price cap – are included in the oil price.

The oil price cap, which entered into force in December 2022, was designed to curb Russia’s energy revenues used to finance war efforts in Ukraine.

It includes a USD 60 cap on crude oil, USD 100 on diesel and other expensive oil products, and USD 45 on fuel oil and other low-cost oil products.

Restrictions on Russian oil exports also include the ban on the provision of technical assistance, brokerage or financial services, including insurance, related to the maritime transportation of Russian oil and oil products to third countries if they are purchased at a price higher than the established threshold.