The European Union is seeking to extend its ban on Russian oil imports by forcing insurers to withdraw cover from ships carrying the country’s international oil shipments.

According to several reports emerging from Brussels, the ban would apply to all shipping, brokerage, insurance and financial services offered by EU companies covering Russian international oil transportation.

The proposal is currently awaiting approval from EU governments but could enter into force in the next month.

It follows on from a formal EU proposal for a ban on all imports of Russian crude in six months and oil products by the end of 2022.

The proposed ban on financial, broking and insurance services would appear to be intended to prevent Russia from finding alternative markets for its EU oil exports around the world.

The EU decision would also likely be enforced in London which is one of the world’s leading markets for marine insurance.

Following Brexit, all the leading London insurers, including protection and indemnity mutual insurers, established EU outposts to access the EU market.

The International Group of Protection and Indemnity Clubs — through which its 13 members participate in a pooled claims and joint reinsurance programme — is also based in London and would be subject to the ban.

As earlier reported by TradeWinds the UK government is also considering introducing its own ban on UK insurers providing cover for Russian ships and shipments.

The issue was discussed at a recent UK Parliamentary Committee.

The UK government has also directly named Russian shipping giant Sovcomflot as a sanctioned entity.

Safety implications

The Baltic Exchange earlier warned its members that any brokerage services provided to Russian companies may already be considered a breach of sanctions.

The withdrawal of P&I cover from ships carrying Russian oil exports may also have some serious safety implications.

It could dramatically increase the number of ships sailing without internationally recognised third-party liability cover.

In the case of a serious accident or oil pollution incident, there would be serious questions raised over whether shipowners’ liabilities under international oil pollution conventions could be met.