The price cap on Russian oil and petroleum products

IG Circular

Published: 10 February 2023

Circular issued by International Group clubs

UPDATE – 10 February 2023

On 5 February 2023 the Price Cap Scheme intended to curb the revenue Russia derives from its petroleum exports was expanded as planned to set price caps for petroleum products of Russian origin which fall under CN code 2710.

Two price caps have been set:

  • USD 45 per barrel for petroleum products traded at a discount to crude oil
  • USD 100 per barrel for petroleum products traded at a premium to crude oil

Details of how different products falling with CN Code 2710 are categorised in accordance with the two caps are set out in Annex XXVIII to Regulation (EU) No 833/2014 but for ease of reference can also be found in a recently published EU Guidance Document.

Under the Price Cap Scheme, IG P&I Clubs will now be able to provide P&I cover for Russian petroleum product shipments to countries which are not part of the Price Cap Coalition provided that the price of the Russian petroleum product cargo from the time it is loaded until it has cleared customs at the port of destination is at or below the relevant price cap per barrel.

Ships with Russian petroleum products on board on the 5 February commencement date may continue to lawfully perform the voyage, even if the cargo has been sold at a price above the relevant Price Cap if the voyage will be completed and the cargo off loaded by 1 April 2023.

A shipowner or charterer that intends to transport Russian petroleum product cargoes after 5 February will now need to provide its P&I Club with an attestation that it will not for the duration of the period of insurance carry Russian petroleum product cargoes which have been sold at a price that for the period it is on board the vessel has exceeded the Price Cap. The attestation Clubs require is at Annex II to this notice and should be provided to the Clubs on an annual basis at the start of each new policy year.

Additionally, shipowners and charterers currently engaged in trades involving the carriage of Russian petroleum products that commenced prior to 5 February 2023, but which will be completed by 1 April 2023 will need to complete a separate attestation. The attestation Clubs require is at Annex I to this notice.

Material changes to this circular to take account of the Price Cap Scheme now applying to Russian petroleum products are shown in the attached PDF in red italics.