The Treasury has stated in the guidance https://home.treasury.gov/system/files/126/cap_guidance_20220909.pdf that those who purchase Russian crude at prices above the cap and knowingly provide false documents could be subject to sanctions violations investigations. He added that governments participating in the cap would share this information to help monitor it.
The price cap plan agreed to by the rich G7 countries provides that participating countries refuse to provide insurance, financing, brokerage, shipping and other services to oil cargoes whose price is above a ceiling to be determined for crude oil and petroleum products.
The Treasury said these service providers should keep records of Russian oil shipments for five years.
“Where a service provider without direct access to price information reasonably relies on a client’s attestation, such service provider shall not be liable for potential sanctions violations due to persons of bad faith” that seek to violate or circumvent the cap, the guidance document says.
ESCAPE VIGILANCE
Nonetheless, the Treasury has warned these companies to be “vigilant” for red flags indicating potential evasion or fraud, including evidence of deceptive shipping practices, refusal to provide requested information about prices, unusually favorable terms that might indicate an upstream arrangement to escape the price cap, or excessively high service costs.
He said any signs of manipulated documents, newly formed companies and anomalous shipping routes should also cause concern.
The Treasury said countries participating in the price cap will work together to set cap levels for Russian crude oil and high-volume and low-volume petroleum product shipments.
Consensus on price cap levels will be reached with the help of a “rotating principal coordinator”, the minister said, suggesting that the coalition countries will have a temporary leadership role as time goes on. progress of the plan.
IT NEEDS MORE TIME
Treasury Assistant Secretary for Economic Policy Ben Harris said on Friday it would take a few more weeks before the price cap plan was fully worked out, including determining the price cap level.
At an event hosted by the Brookings Institution, Mr Harris urged cap skeptics “to wait for all the information and maybe not to fire before concluding it will be too difficult to implement”.
Western sanctions imposed on Russia following its invasion of Ukraine led to a sharp collapse in Russian imports, hitting its domestic production hard, while foreign companies left the country in droves.
At the same time, the Russian oil industry benefited from a 60% increase in oil prices which more than compensated for lower export volumes.