Thursday, 18 August, 2022
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EU insurance ban targets Russian oil exports

LONDON: An EU ban on insuring ships transporting Russian oil could potentially hurt Moscow more than its embargo on the nation's crude, analysts say.

The European Union recently unveiled the insurance ban in a sixth set of economic sanctions aimed at punishing Russia over its invasion of Ukraine.

In a further knock, G7 leaders are seeking a price cap for Russian oil to further hurt Kremlin revenues, reports AFP.

The EU insurance and reinsurance ban, covering all maritime transportation of Russian oil, comes as Moscow seeks to ramp up sales to China and India to help offset the embargo.

The insurance ban "would have further-reaching consequences for the oil market than the EU oil embargo", noted Commerzbank analyst Carsten Fritsch.

Companies will no longer be permitted to transport oil from Russia by sea, or to insure such shipments.

EU insurers have until the end of this year to implement the ban, while those in Britain are expected to follow suit.

"There is going to be an impact and there is going to be a pricing impact," said Marcus Baker, international head of marine at US broker Marsh.

A similar ban was used in 2012 when the EU prohibited European insurers and reinsurers from covering vessels carrying Iranian oil. The bloc had also slapped an embargo on the purchase of Iranian crude as part of sanctions against Tehran's controversial nuclear programme.

Commercial ship operators require insurance for the vessel, its cargo and for protection and indemnity (P&I) covering events such as war and environmental damage.

Mathieu Berrurier, managing director of marine insurance broker Eyssautier- Verlingue, told AFP that vast amounts of cash were required for potential payouts caused by such disasters.