The UK government has introduced legislation banning the use of UK insurance services for the transportation of Russian oil, unless the cargo is purchased below the price cap recently agreed by G7 countries.
The move follows a decision by G7 finance ministers in September to introduce a price cap on Russian oil exports that will allow third countries outside the G7 to continue to buy Russian oil at affordable prices.
The cap does not apply to imports to the UK and its coalition partners, which have already agreed not to allow Russian crude into their country.
The level of the price cap has not yet been announced, and is currently under discussion.
The ban — which enters into force on 5 December for Russian crude exports and 5 February 2023 for refined oil products — also covers other shipping services including shipbroking.
“The ban on services, including insurance, brokerage and shipping, will be coupled with a general licence, expected shortly, that lays the basis for an oil price cap exception that will allow third countries to continue accessing services only if purchasing Russian oil at or below the cap,” the UK government said in a statement.
The UK highlighted the critical role its protection and indemnity insurers play in the transportation of oil by sea.
It said UK-based P&I insurers account for more than 60% of cover in the sector.
Non-UK P&I insurers will also be bound by the G7 price cap ban through their commercial operations within the European Union.
The UK ban will equally apply to other lines of marine insurance, including hull and machinery and cargo cover, provided through the London company and Lloyd’s of London market. The London market is one of the leading providers of marine insurance.
UK chancellor of the exchequer Jeremy Hunt said: “We continue to stand by Ukraine in the face of Putin’s barbaric and illegal invasion. We’ve banned the import 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 profiteer from his illegal war.”
The US is expected to introduce its ban on 19 January, later than the UK and the EU.
