The British authorities have decided to postpone the introduction of a ban on insurance of ships with Russian oil, which are sent to third countries. The authorities fear that such a decision will provoke a new round of price increases and provoke an aggravation of the energy crisis. This is reported by the British Financial Times, citing sources.
Back in June, after the adoption of the sixth package of sanctions against Russia, British and European officials agreed to coordinate their actions, the British side promised to synchronize their bans with European ones, but so far this has not happened. EU sanctions impose a ban on insurance of ships with Russian oil bound for third countries from 5 December.
The UK has so far approved only a ban on insuring ships with Russian oil heading to the kingdom, the ban will come into force in early 2023. Thus, London still retained the opportunity for its insurers to earn on the supply of Russian oil, albeit to third countries. Sources close to the talks between US, British and European leaders claim that the country's authorities fear that a single ban on insurance in December will lead to a sharp jump in oil prices, which will only exacerbate the energy crisis around the world.
“We are ready to impose further sanctions against Russia and are working closely with our allies to ensure maximum damage to the Russian economy,” the UK Treasury said in a statement.
Readiness for the implementation of new sanctions against Russian oil was also announced at the main ship insurance and reinsurance exchange – Lloyd's of London. Underwriting director at Lloyd's Market Association (a subsidiary of the stock exchange) Patrick Davison said that so far there have been no new restrictions from the British authorities, but the market is in close contact with government officials.
“Given the global nature of the insurance industry, a European ban alone could well affect the appetite for Russian oil supplies, including in London,” Davison said, hinting at a reduction in demand for Russian transportation insurance even with sanctions imposed only by European countries.
The publication also notes that the introduction of a single ban on insurance by the US, the EU and the UK is bogged down, among other things, because of the fears of the US authorities, who fear a new round of rising oil and gasoline prices ahead of the midterm elections to be held in November. For this reason, among other things, the American authorities are primarily betting not on a ban on insurance, but on setting a maximum price for Russian oil.
At the same time, the American authorities themselves previously admitted that they were ready to synchronize the introduction of their restrictions with the European and British authorities. At the moment, December has been designated as the "month of change", it is then that the EU will introduce a ban on insurance of all tanker transportation (then the embargo will also work). By this time, the US and UK promise to introduce their own mechanisms of restrictions. The US is betting on setting a ceiling price for Russian oil that will be well below the market price, but still beneficial for the Russian oil industry to continue shipping it abroad.
Russian authorities do not share American optimism. Russian President Vladimir Putin is convinced that the introduction of such mechanisms will only accelerate world oil prices to new heights and exacerbate the energy crisis around the world, and Deputy Prime Minister Alexander Novak assured that Russia simply will not supply its oil if it is unprofitable. Western countries hope that the ban on insurance of tanker shipments to third countries, coupled with the mechanism of marginal oil prices, will sharply hit Russia's income and put additional pressure on the authorities.