New squeeze on Moscow’s energy exports. To what the Financial Times, The European Union and the United Kingdom have agreed on a ban on insurance for ships carrying Russian oil, cutting boats – even – out of the London Lloyd’s market. The measure, underlines the FT, will exacerbate the crisis in raw materials, which has already exploded with the Russian invasion of Ukraine.
The “insurance ban” is part of the new EU sanctions package against Moscow, in an attempt to further weaken the Russian economy. European leaders had already agreed to ban sea imports of crude oil from Moscow from 2023, but the UK’s involvement paved the way for a policy veto. Moscow could emerge even more penalized, finding itself forced to look for alternatives in smaller (and less recognized) markets than the European and British ones.
The weight of insurance contracts in sanctions in Moscow
The insurance sector has emerged as one of the most delicate junctions in the negotiations for the sixth EU sanctions package, given its – crucial – impact on the entire international trade. The agreement with London also arose from the fear that a purely European tender would end up favoring the British insurance sector, diverting all contracts frozen on the Continent to the London market.
The president of the Commission, Ursula von der Leyen, had already announced measures on the shipping on May 30, but it was London’s final placet that made the deal possible. Among the countries most reluctant to give their green light there would have been Greece and Cyprus, later persuaded by the accession of the United Kingdom. The British government has not commented on the Financial Timesbut sources in Downing Street reveal that an announcement on the ban is imminent anyway.
Perhaps a call also on a G7 scale
The London insurance industry had already prepared for sanctions in the maritime sector, after having applied them in those of aviation and space. Prominent figures in the Lloyd’s market have nevertheless tried to highlight all the obstacles to the tightening, such as the difficulty of establishing the exact origin of the cargo ships.