Sanctions Evasion Reference

How does the Russian oil price cap work?

The price cap lets service providers carry Russian oil only if it was bought at or below a set price. Because they cannot see the price, the US relies on recordkeeping, attestations and a safe harbour.

step

10 of 12

reviewed

2026-09-20

Cite this page
APA 7 
Sanctions Evasion Reference. (2026, September 20). How does the Russian oil price cap work? https://sanctionsevasion.org/learn/price-cap/
Chicago 
Sanctions Evasion Reference. “How does the Russian oil price cap work?” Last reviewed September 20, 2026. https://sanctionsevasion.org/learn/price-cap/.
BibTeX 
@misc{ser-learn-price-cap,
  author = {{Sanctions Evasion Reference}},
  title  = {How does the Russian oil price cap work?},
  year   = {2026},
  note   = {Last reviewed 2026-09-20},
  url    = {https://sanctionsevasion.org/learn/price-cap/}
}

The date is when this page was last reviewed, not when it was first published.

The price cap is a different kind of measure from a designation. It does not forbid buying Russian oil. It limits who may provide the services that move it, so that oil sold above the cap has to travel without those services.

The mechanism

OFAC’s April 2023 alert explains the structure. To implement the policy OFAC issued two determinations under Executive Order 14071, “one for Russian oil and one for petroleum products”. U.S. persons “are authorized to provide certain services (covered services) related to the maritime transport of Russian oil as long as that oil was purchased at or below the relevant price cap”. Those providing covered services “are required to reject participating in an evasive transaction or a transaction that violates the price cap determinations, and to report such a transaction to OFAC”.

The cap is a coalition measure. The October 2023 advisory was issued by the Price Cap Coalition, which it describes as the G7, the European Union and Australia, and states the policy’s purpose as to “deprive the Russian Federation of the revenue it uses to wage its unjust war against Ukraine, while maintaining reliable supply of crude oil and petroleum products to global markets”. The price level itself is set in the determinations and coalition decisions and has changed; read the current figure at OFAC’s price cap pages, not here.

The problem it creates

A ship owner, insurer or flag registry providing covered services usually cannot see what was paid for the cargo. The regime deals with that in two ways:

  • Recordkeeping and attestations. Good-faith service providers “can use the recordkeeping and attestations described in the Price Cap Guidance to be afforded safe harbor from OFAC enforcement if someone causes them to inadvertently violate”. For the actors who “regularly have direct access to price information, such as commodities traders”, OFAC says they must retain documents showing purchase at or below the cap, for example invoices, contracts and proof of payment. Those documents “do not need to make any mention of the price cap”.
  • Separate costs. Shipping, freight, customs and insurance costs are outside the cap, and “the failure to itemize these costs can be used to obfuscate the fact that Russian oil was purchased above the price cap”. They must be invoiced separately. The 2023 advisory adds that traders using cost, insurance and freight contracts should require an itemised breakdown.
Itemised invoice
oil, to port of loading: checked against the cap
freight, insurance, customs: outside the cap
 One undivided figure
oil and shipping together: no way to tell how much is which
 Shipping line padded
oil, shown at the cap
shipping charge that is not commercially reasonable
Schematic, not a price. The cap applies to the oil; shipping, freight, customs and insurance sit outside it and have to be invoiced separately. OFAC's alert notes that failing to itemise those costs "can be used to obfuscate the fact that Russian oil was purchased above the price cap", and the Price Cap Coalition advisory treats billing of commercially unreasonable or opaque shipping and ancillary costs as a sign of potential evasion. The bars are the same length on purpose: the total is the same, and only the invoice's structure tells a reader whether the cap was met.

What evasion looks like

The 2023 alert names two patterns. One is opacity in shipping costs, above. The other is deception about the cargo’s origin: OFAC describes tankers manipulating AIS “to disguise the fact that they have called at the port of Kozmino or other ports on the Russian Federation’s eastern coastline”, and says spoofing can also mask ship-to-ship transfers “carried out to disguise the origin of Russian oil”. Its instruction to service providers is direct: view “AIS manipulation that disguises a tanker’s port of call in the Russian Federation as evidence of possible evasion of the price cap”.

Both patterns rest on the same fact: the regime works on paper. The techniques it invites are paper techniques (an inflated shipping invoice, a false attestation) or track techniques (a disguised port call), which is why the attestation fraud and AIS pages sit next to this one.

Read next

Terms used on this page

  • Price cap — A measure permitting specified services for seaborne oil only where the cargo was bought at or below a stated price, enforced through the service providers rather than at the border.
  • Attestation — A signed statement by a party in a transaction confirming a fact that the recipient cannot itself observe, relied on as the basis for providing a service.
  • Protection and indemnity club — A mutual association of shipowners that provides third-party liability cover, including for pollution, which ports and states generally require before a vessel may trade.
  • Shadow fleet — A loosely defined group of ageing tankers with opaque ownership and insurance that carry sanctioned or price-capped cargo outside mainstream shipping arrangements.
  • Ship-to-ship transfer — Transferring cargo directly between two vessels at sea or at anchorage rather than through a port terminal.

Sources

  1. Sanctions Advisory for the Maritime Oil Industry and Related Sectors. U.S. Department of the Treasury, Office of Foreign Assets Control, 2023. Price cap advisory, 12 October 2023.
  2. Alert: Possible Evasion of the Russian Oil Price Cap. U.S. Department of the Treasury, Office of Foreign Assets Control, 2023. OFAC alert, 17 April 2023.
  3. Treasury Sanctions Entities for Transporting Oil Sold Above the Coalition Price Cap. U.S. Department of the Treasury, 2023. Press release jy1795, 12 October 2023.
  4. Guidance to Address Illicit Shipping and Sanctions Evasion Practices. U.S. Department of State, U.S. Department of the Treasury and U.S. Coast Guard, 2020. Global maritime advisory, 14 May 2020.