FT: West postpones the prohibition on insurance of Russian oil shipments due to possible price rise

Oleg Panfilovych

Western countries have decided not to introduce a prohibition on insuring sea transportation of Russian oil for now and have allowed some international shipments amid fears of rising prices and the development of an energy crisis.

The Financial Times writes about it.

The insurance ban was part of the EUʼs sixth package of sanctions, which was agreed at the end of May. The British government then said it had joined the ban. It is under British jurisdiction that the largest companies that insure sea transportation are located.

At the same time, representatives of the local insurance market opposed the embargo. They drew attention to the complexity of the process of determining exactly where the oil that the ships are carrying comes from and how it leaves Russian ports.

As of the end of July, the UK only announced a ban on insuring tankers with Russian oil destined for the UK market, which will take effect after December 31, 2022.

The newspaper also notes that the European Union at the end of July also introduced a number of exceptions to its ship insurance sanctions that allow European companies to enter into contracts for the transportation of Russian oil to non-EU countries.

Representatives of the US administration reported that the United States and Great Britain plan to ban insurance of ships with Russian oil by the end of 2022, but before that it is necessary to resolve the issue of limiting its prices.

  • The "Big Seven" countries plan to introduce a mechanism to limit the price of Russian oil by the beginning of December. In this way, they want to deprive the Kremlin of part of the profits from the sale of energy resources.
  • During the G7 summit, the United States and its allies discussed ways to reduce the price of Russian oil on the world market. They want to see it at the level of $40-60 per barrel, which will seriously affect Russian revenues.
  • Against the background of the war, the USA and the EU gave up Russian fuel, but in stages. The EU allocated half a year to abandon oil, and up to eight months to abandon petroleum products. Oil deliveries via pipelines have not been sanctioned.