EU to cease Russia’s global oil trade by targeting insurance services

Amid Russia’s invasion of Ukraine, the European Union plans to go ahead with import ban on the Russian crude oil by targeting insurers with a motive that could substantially impair Moscow’s ability to export its oil anywhere in the world.

As per credible sources, the bloc is suggesting to forbid Europe-centric firms and vessels from offering services such as insurance connected to the transportation of Russian products and oil across the world as part of their new sanction plan.

Apparently, while the terms are still under discussions amongst the member states, the tool is potentially powerful as 95 per cent of the global tanker accountability cover is arranged via a London-centric insurance company, International Group of P&I Clubs, that heeds European law.

In the absence of such cover, the Russian customers and the country will have to look for alternatives for risks including mishaps and oil spills at sea that can escalate into multi-billion-dollar claim.

Daniel Martin, Partner and Adviser to Shipowners, Traders, Brokers, and Insurers at HFW stated that the move will see insurers being very careful.

Daniel added that European Union has a lever as it holds an important position in insurance, and he expects its use to ensure that the sanctions are as multidimensional as possible.

According to reports, the cover from the International Group is a part of contracts for the transportation of most of the oil cargoes.

Furthermore, the International Group, also called as IG, offers reinsurance if claims surpass what the group’s 13 single members cover.

As per claims, Insurance is one of the major ways by which Europe and U.S. successfully limited oil exports of Iran.

Allegedly, if the move gets completely implemented, it will increase the stakes with Moscow. The insurance steps are EU’s top priority to cease imports of refined products and crude from Russia by the year end.

Source Credits: - https://www.bloombergquint.com/politics/eu-aims-to-target-russia-s-global-oil-sales-with-insurance-ban