U.S. sets timeline for Russian oil cargoes subject to price cap

Tanker carrying barrels of Russian fuel oil delivers its cargo in Matanzas
Liberia-flagged Aframax tanker Suvorovsky Prospect discharges fuel oil from Russia at the Matanzas terminal, in Matanzas, Cuba, July 16, 2022. REUTERS/Alexandre Meneghini

WASHINGTON, Oct 31 (Reuters) - The U.S. Treasury Department on Monday said vessels of Russian petroleum that are loaded before Dec. 5 and unloaded at their destination before Jan. 19 will not be subject to the price cap planned by Western governments, providing some breathing room for traders and shippers.

The U.S. government, the G7 and the EU plan to impose the price cap which begins on Dec. 5 as part of sanctions against Russia for its invasion of Ukraine.

The exact price levels of the caps, which will be placed on shipments of Russian crude oil and oil products, is still being worked out. A senior Treasury Department official told reporters in a call that discussions on the price level among G7 countries and Australia are centering on Russian oil production costs and historic prices for Russian Urals oil.

One person familiar with the process said last week the cap will be determined in line with the historical average of $63-$64 a barrel, a level that could form a natural upper limit. read more

The Treasury official said the department had held more than 100 conversations with industry groups to address their concerns.

Allowing petroleum to be unloaded before Jan. 19 gives players in oil markets room to get used to the price cap, the official said. The Treasury published the clarification on when cargoes would be hit with a price cap on its website in a "frequently asked questions" update.

The Treasury official also said that the coalition imposing the price cap -- Australia and G7 members Britain, Canada, France, Germany, Italy, Japan and the United States -- are now more focused on making sure that companies understand how to comply with the cap, rather than recruiting new member countries.

The coalition partners plan to enforce the cap by denying maritime services, such as insurance, finance, brokering and navigation, to Russian oil cargoes priced above the limit. G7 countries are dominant in providing these services, but Moscow has vowed to stop selling oil to countries and companies that impose the cap.

The Treasury official said Russia should feel free to try to line up tankers and other services outside the price cap, and the G7-Australia coalition was not trying to prevent that. But those services would likely be more expensive and would not offer Russia enough capacity for its current export volumes, the official added.

Reporting by Timothy Gardner, David Lawder and Daphne Psaledakis; Editing by David Gregorio

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