Oil embargo: insurers still do not know how to work

With just six weeks to go before European Union sanctions against russian oil come into effect, insurers still don’t know exactly how they will work.

A key link in cargo insurance is P&I Clubs. They cover 90% of the world’s ships against risks, including spills. Many of the group’s clubs are based in London, but have European organizations or access to European reinsurance, meaning they rely heavily on EU rules, Reuters writes.

So, what will insurance for russian raw oil cargoes look like after December 5, when the next EU sanctions package comes into full effect?

Mike Salthouse, who chairs the sanctions committee of the International Group of P&I Clubs and is global director of P&I claims in the North of England, says the cap on russian oil prices is a G7 initiative aligned with the existing EU ban on services. And until the details of the price cap are revealed, and the G7 (notably the US and the UK) publish their own decision, it’s impossible to answer that question.

“The US and the UK insist that they intend to ensure that their legislation is as consistent as possible with EU legislation. However, legal and interpretive systems differ, and gaps between different laws or guidelines can lead to conflicts,” says Salthouse.

We will remind you that the sixth package of EU sanctions (adopted on June 3) prohibits the sea import of russian oil from December 5, 2022, and from February 5, 2023 – the import of petroleum products from russian federation.