London announced on Thursday that it would prohibit British ships and service providers, including insurance companies, from contributing to the shipping of Russian oil sold above a ceiling price set by the G7 and Australia.
The decision follows a commitment by G7 finance ministers in September to cap Russian oil prices, and brings the United Kingdom, the world leader in a type of insurance essential to the shipping of oil, into line with the European Union (EU).
The measure will come into effect on December 5, the British government said in a statement.
The price cap is “a way to undermine (Russian President Vladimir) Putin’s ability to finance his war in Ukraine … while ensuring that third countries can continue to get affordable oil,” the finance ministry said in the statement.
On the other hand, neither the United Kingdom nor its G7 partners and Australia will benefit from the cap, London assures, because the latter have anyway “banned the import of Russian oil”.
The services covered by the ban include “insurance, brokerage and shipping” and the level of the cap will be “determined by the coalition in due course”, the British government added.
Commercial vessels must be covered by different types of insurance: for damage to the vessel, for the cargo, but also unlimited coverage for damage to third parties, the protection and indemnity insurance (P&I).
This particular type of marine insurance, covering risks ranging from war to environmental damage, is mainly provided by associations of professionals, called “P&I clubs”, which mutualize the risks, as it involves colossal amounts.
London’s position on this point was particularly scrutinized by industry players, as the UK represents 60% of the P&I insurance market.
London also indicated that further restrictions, this time on the sale of Russian refined petroleum products, will come into effect on February 5 “to align with the EU timetable for a similar measure.
