The Financial Times reports that Britain and the European Union have agreed a co-ordinated ban on insuring ships carrying Russian oil. This will seriously affect its ability to export crude oil.
Consequently, such a ban would contribute significantly to another upheaval in international oil markets, ultimately pushing prices even higher.
The insurance ban is part of the sixth package of sanctions approved by the EU against Russia this week. It is also known as a gradual embargo on oil and petroleum product imports to Russia.
According to the report, UK involvement was crucial to the introduction of the insurance ban.
However, the ban has some disadvantages. Firstly, according to unnamed sources interviewed by the FT, it is difficult to prove where the oil shipped by tankers actually comes from.
Second, some insurers may refuse to cover any vessels coming from certain ports even though these ports do not service only Russian commodities. As the FT notes, some Russian ports handle Kazakh oil, which is not subject to sanctions.
Currently, G7 members are discussing a wider insurance ban on Russian oil shipments, which could take effect in six months, according to a senior official from the European Commission.
