"This new measure continues to turn the screws on Putin’s war machine, making it even tougher for him to profit from his illegal war. "
- Jeremy Hunt, Chancellor of the Exchequer
The UK government has confirmed that a service ban is set to stop all countries from transporting Russian oil unless it is purchased at or below the Oil Price Cap. Third countries are exempt, so they can continue securing “affordable oil.”
This ban will include insurance, brokerage, as well as shipping, and will be coupled with a General License, expected shortly, that lays the basis for an Oil Price Cap expectation that will allow third countries to continue accessing services only if purchasing Russian oil at or below the cap.
Insurance has been noted as one of the key services that enable the movement of oil by sea, particularly protection and indemnity (P&I) insurance which relates to third-party liability claims – the UK is a global leader in the provision of P&I cover, writing 60% of global cover.
To enforce these measures the Treasury has set up a new team, based in the Office of Financial Sanctions Implementation.
This team will set up the licensing and enforcement system for the Oil Price Cap, engage with the industry to ensure readiness for the cap, and monitor the level and impact of the cap on an ongoing basis.
Legislation on Russian oil is set to be enforced on the 5th December and further measures on the 5th February 2023.
Jeremy Hunt, Chancellor of the Exchequer, has said:
“We continue to stand by Ukraine in the face of Putin’s barbaric and illegal invasion. We’ve banned the impact of Russian oil into the UK and are making good progress on phasing it out completely. This new measure continues to turn the screws on Putin’s war machine, making it even tougher for him to profit from his illegal war.”
The British Insurance Brokers’ Association (BIBA) has said it is not able to offer any comment on this subject.