On 3 December 2022, the EU and UK, in partnership with the G7 countries and Australia agreed to set the price cap on Russian crude oil traded by firms shipping oil to third countries at US$60 per barrel. The EU, UK and their coalition partners will only provide services facilitating the maritime transport of Russian oil (such as shipping, freight and insurance) where firms trade at or below this cap.

In line with this agreement, the oil price cap on Russian crude oil came into effect on 5 December 2022 and the oil price cap on Russian refined oil products will come into force on 5 February 2022, as per the EU Council’s adopted decision on 6 October 2022, here. The decision also prohibits the related provision of technical assistance, brokering services or financing or financial assistance.

The price cap mechanism is subject to review every two months to respond to developments in the market, and is intended to be set at least five per cent below the average market price for Russian oil and petroleum products, calculated on the basis of data provided by the International Energy Agency.

The UK regime has been implemented under the Russia (Sanctions) (EU Exit) Regulations 2019, which has been extended to the UK Overseas Territories under the Russia (Sanctions) (Overseas Territories) Order 2020. The Russia oil price cap is consequently in force in the Overseas Territories, such as the BVI and Cayman Islands, just as in the UK and EU.

The UK authorities have issued a number of general licences, guidance and reporting forms related to the cap which can be found here.

EU’s press release can be found here.