Russian oil price peak
This British decision follows the commitment made last September by the G7 finance ministers to cap the price of Russian oil.
This price cap is “a way to undermine Putin’s ability to finance his war in Ukraine (…) while ensuring that third countries can continue to obtain oil at an affordable price”, specified the Ministry of Finance. in a statement from the British government.
On the other hand, neither the United Kingdom nor its G7 partners and Australia will benefit from the ceiling, assures London, because the latter have anyway “banned the import of Russian oil”.
Different services covered
The services covered by the ban include, in particular, “insurance, brokerage and maritime transport”. The level of the cap will be “set by the coalition in due course”, said the British government.
London has also indicated that other restrictions, this time on the sale of Russian refined petroleum products, will come into force on February 5 “to align with the EU’s timetable for a similar measure”.
The British leaders in oil shipping insurance
The measure allows the United Kingdom to align itself with European decisions, an “alignment” all the more important since British companies are leaders in a type of insurance essential to the maritime transport of oil.
Commercial boats must be covered by different types of insurance: for damage to the boat, for the cargo, but also unlimited cover for damage to third parties, protection and indemnity (P&I) insurance.
This particular marine insurance, covering risks ranging from wars to environmental damage, is mainly provided by associations of professionals, called “P&I clubs”, which pool the risks, because it covers colossal amounts.
London’s position in this area was particularly scrutinized by players in the sector, the United Kingdom representing 60% of the P&I insurance market.
Our opinion, by leblogauto.com
Last April, an article in the Financial Times called the visit of Boris Johnson, then British Prime Minister, to Kyiv to show his solidarity with Volodymyr Zelensky, the Ukrainian President, as “eye-catching and raucous stuff”.
Adding that if Johnson wanted to support Ukraine against Russia’s invasion, he would have to make a symbolic visit to a closer destination: the headquarters of Lloyd’s, the world’s largest insurance market, in the City of London… .
Until that date, the insurance industry had attracted little public attention compared to banks, with respect to Western sanctions against Russia. No wonder: most politicians (and voters) have little knowledge of the sector’s complex but crucial role in finance and trade, the media added.
If the British government, along with its European and American counterparts, demanded that insurance companies stop protecting tankers carrying Russian oil, it would be another powerful weapon in Western efforts to pressure Moscow, the FT said.
Noting that tankers carry about three-quarters of all Russian oil exports, one way for the West to reduce the flow of tankers would be to ban EU vessels from “touching” Russian crude, he added.
According to him, another more effective tactic that would affect non-European ships would be that the British government prevents the Lloyds Marine and Aviation unions from insuring the fleets which transport Russian oil; and for the UK, EU and US to ban the provision of property and indemnity insurance. This would not stop all traffic, but most nation states would not deal with uninsured fleets, and it would be difficult for transport groups to quickly find alternative cover.
95% of the world’s fleet uses P&I insurance – protection and indemnity insurance, a form of mutual marine insurance provided by gatherings of professionals, called P&I Clubs and London provides 80% of the war cover, Neil Roberts, head of navy and air force at the Lloyds Markets Association, told British politicians last April.
For that reason, it’s time for Western leaders like Boris Johnson to take a hard look at these weapons of insurance – even if the Lloyds and P&I contracts aren’t as telegenic as a walkabout with Zelensky in Kyiv concluded the Financial Times.
Sources: AFP, Financial Times, Maritime-executive.com