Russia – Australia implements the G7 price cap on Russian oil
Australia has joined the G7 in implementing a price cap on Russian oil. On 2 December 2022, G7 countries plus Australia agreed to the price cap of USD 60 per barrel of seaborne Russian-origin crude oil.
The price cap is designed to maintain a reliable supply of oil to the global market while reducing the revenue Russia earns from oil. This forms part of a comprehensive suite of measures Australia has introduced to impose costs on Russia for its illegal and immoral invasion of Ukraine.
Australia has already prohibited the import, purchase or transport of Russian oil, gas, refined petroleum products and coal since 25 April 2022.
The provision of financial assistance or a financial service is prohibited without a sanctions permit, if it assists with, or is provided in relation to, a sanctioned import (regulations 5(2) and 13 of the Autonomous Sanctions Regulations 2011 (the Regulations)).
Financial service is defined in regulation 3 of the Regulations and includes:
- (a) an investment service; and
- (b) a service providing financial advice; and
- (c) a brokering service; and
- (d) insurance; and
- (e) reinsurance; and
- (f) financial derivatives.
A sanctioned import for Russia includes the import, purchase or transport of 'import sanctioned goods' if the goods are exported from Russia (or a part of Russia) or the goods originate in Russia (regulation 4A). Import sanctioned goods for Russia include 'petroleum oils and oils obtained from bituminous minerals, crude' (Tariff Code 2709) as per item 9 of Schedule 1 of the Autonomous Sanctions (Import Sanctioned Goods - Russia) Designation 2022).
Implementation of the price cap on Russian oil
The Minister for Foreign Affairs has issued a general permit authorising the provision of financial assistance and financial services (referred to as Relevant Services) if they assist with, or are provided in relation to, the import, purchase or transport of Russian oil, if that oil was purchased at or below the price cap (USD 60 per barrel).
Russian oil means petroleum oils and oils obtained from bituminous minerals, crude (Tariff Code 2709), designated as import sanctioned goods for Russia by item 9 of Schedule 1 to the Autonomous Sanctions (Import Sanctioned Goods—Russia) Designation 2022, that are exported from, or originate in, Russia or part of Russia.
For the purpose of determining whether the provision of Relevant Services is authorised by the permit, the date for determining whether the price per barrel of the Russian oil is or was below the price cap is the date of the most recent Covered Transaction.
Covered Transactions are any transaction for the sale of Russian oil up until the Russian oil first passes through the customs control of a country other Russia.
As outlined above, the permit pertains only to the provision of Relevant Services relating to Russian oil at or below the price cap. It does not authorise the importation, purchase or transport of Russian oil, which are subject to separate prohibitions in the Regulations.
Together with G7 countries, additional price caps are intended to be implemented for refined petroleum products in February 2023.
Using the permit
If you are an Australian or Australian body corporate seeking to rely on the permit to engage in these services, please contact the Australian Sanctions Office (through our online portal, Pax) to request a copy of the permit.
Details of sanctions that Australia imposes against Russia are available on the Russia sanctions page of the DFAT website.
Should you have any other questions, you can contact the Australian Sanctions Office using Pax.