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The UK is banning countries from using the UK’s services to transport Russian oil unless said oil is purchased at or below the price cap expected to be set by the G7, the UK government said, noting that legislation introduced on Thursday sets a ban on UK ships and services facilitating the maritime transport of Russian crude oil from December 5, 2022.
This date is the official start of the EU embargo on imports of Russian crude oil by sea.
“The ban on services, including insurance, brokerage and shipping, will be coupled with a General Licence, expected shortly, that lays the basis for an Oil Price Cap exception that will allow third countries to continue accessing services only if purchasing Russian oil at or below the cap. The level of the price cap will be set by the coalition in due course,” the UK government said.
The UK is a global leader in the provision of protection and indemnity (P&I) cover, writing 60% of global cover, the government noted.
“Today’s legislation on crude oil will come into force on 5th December with further measures on refined oil products coming into force on the 5th February, to align with EU timelines for a parallel measure,” it said.
Earlier this year, the G7 group of the most industrialized nations agreed to finalize and implement a price cap on Russian oil, aiming to reduce Vladimir Putin’s oil revenues for his war chest. The G7 will ban maritime transportation services for Russian oil unless the products are purchased at or below a certain price cap.
European Union ambassadors also endorsed the price cap after reaching an agreement to impose a new package of sanctions on Russia.
Yet, many analysts and experts doubt that the price cap would serve its dual purpose of cutting revenues for Putin while keeping Russian oil flowing because top importers China and India haven’t signed onto the price cap, and because Putin could simply make good on his promise to halt all energy supply—including crude, fuels, natural gas, and coal—to the countries that sign up to cap the price of Russian oil.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.