The EU announced a global ban on providing marine insurance to ships carrying Russian oil two months ago, pending coordinated action with the British government. However, the UK has yet to introduce similar restrictions. UK involvement is crucial to the effectiveness of any such ban because London is at the heart of the marine insurance industry. Meanwhile, Brussels in late July amended some restrictions on transactions with state-owned Russian companies, citing concerns about global energy security. A joint UK-EU ban on marine insurance would be the most comprehensive restriction yet on Russian oil, ending access to much of the global tanker fleet for Moscow’s exports. But US officials have expressed concern that an immediate global ban on marine insurance would drive up prices by pulling millions of barrels of Russian crude and oil products off the market. European and British officials told the Financial Times in May that the UK had agreed with the EU to coordinate a ban on insuring Russian oil cargoes. However, Britain’s latest sanctions against Russia, approved by parliament in July, ban the provision of insurance to ships carrying Russian oil to the UK only after 31 December. The legislation was introduced after the government promised to outlaw the import of Russian oil from the end of the year, but does not ban servicing shipments from Russia to other countries, British officials said. “There is no current UK ban affecting global shipments of Russian oil,” said Patrick Davison, deputy director of the Lloyd’s Market Association, an industry group for Lloyd’s insurers. “Given its global nature [re] in the insurance industry, the existence of EU restrictions may well affect the appetite for Russian oil shipments to London.” He said Lloyd’s was in close contact with [the UK government] “and will cooperate with them on any future sanctions they seek to impose.” The UK Treasury said it was still investigating the best course of action. “We stand ready to impose further sanctions on Russia and are working in cooperation with our allies at pace to ensure that they can be applied to the maximum effect on the Russian economy,” he said. The EU insurance ban was introduced on June 4 and remains in place. It prevents the bloc’s companies from taking out new insurance for any ship carrying Russian oil anywhere. Existing contracts remain in effect until December 5, when all such activities will be prohibited. However, the EU amended some of its own sanctions to allow European companies to do business with certain Russian state entities, such as Rosneft, to transport oil to countries outside the bloc. European companies will no longer be prevented from paying companies such as Rosneft, “if such transactions are absolutely necessary”, to buy or transport crude or oil products to third countries, a European Commission spokesman told the FT. The EU said in a statement that the measures were taken to “avoid any negative consequences for food and energy security around the world”. The White House has been working since June to pressure G7 countries to support a price cap mechanism that would allow some Russian oil to reach third countries if they agreed to pay a below-market price for the cargo. Officials in Washington said the US and UK still plan to ban maritime services, including insurance, until the EU ban takes full effect in December. But they want a cap on the price of oil first. US President Joe Biden wants to lower gas prices ahead of November’s midterm elections. Sanctions lawyers said the EU appeared to be stepping up its efforts to stem the global flow of Russian oil and there was renewed uncertainty among traders over the UK’s commitment to a global insurance ban. Sarah Hunt, a partner at HFW, a law firm, said trading houses were asking whether it was now legal to buy Rosneft oil for shipment outside the EU. “The new EU sanctions effectively allow the removal of Russian crude from European companies. We were surprised by that,” he said. Leigh Hansson, a partner at Reed Smith, another law firm, said the EU sanctions amendment was a “major setback”, adding that lawyers had also expected “stronger” measures from the UK so far. Additional reporting by Alice Hancock and David Sheppard
