The European Union is working to coordinate a ban on providing the insurance services needed to ship Russian oil anywhere in the world with some Group of Seven members, according to people familiar with the matter, in a move that could further hit Moscow’s ability to finance its war in Ukraine.
The European Commission, the bloc’s executive arm, is in talks with the U.K. as part of the effort, said one of the people, who asked not to be identified because the plans are private.
Representatives of EU national governments are expected later on Wednesday to approve a sixth sanctions package targeting Russia for its invasion of Ukraine. The measures will include a prohibition on financing, brokering services and technical or financial assistance, which would kick in six months after the package is adopted.
A joint push to target insurers of Russian oil shipments could dramatically impair Moscow’s ability to finance President Vladimir Putin’s war. That’s because 95% of the world’s tanker liability coverage is arranged through a London-based insurance organization called the International Group of P&I Clubs that has to heed European law.
Without such cover, Russia and its customers would have to find alternatives for risks including oil spills and mishaps at sea that can quickly run into multi-billion-dollar claims.
The Financial Times reported earlier that the EU and UK had reached an agreement on coordinating the ban.
The insurance measures come on top of the EU’s proposal to ban seaborne imports of Russian crude in sixth months from the adoption of the package and refined products in eight months. While deliveries via the giant Druzhba pipeline will be temporarily spared, Germany and Poland, the biggest buyers from that source, have pledged they will wean themselves off Russian supplies regardless of any EU action.
If both countries follow through on those commitments, the total effect, along with the seaborne embargo, would be to cut 90% of Russian crude oil sales to the EU by year’s end.
The EU initially considered even stronger measures to ban tankers from moving oil to third countries but dropped the plans after Greece raised concerns that such a move would require international coordination.
Source: Rigzone.com
