EU passes ban on Russian offshore oil imports and cargo insurance

The European Union formally adopted a sixth package of sanctions against Russia on Friday, which includes a ban on imports of Russian crude by sea and a ban on marine insurance for Russian crude going to third countries, which the EU expects will make it very difficult for Russia to ship its oil to the rest of the world.

For offshore crude, transactions on the spot market and the fulfilment of existing contracts will be allowed to take place within six months after the sanctions come into force. For petroleum products, the European Commission said they would be allowed for eight months after entry into force. The ban applies to 90% of current EU oil imports from Russia.

Due to its geographical position, Bulgaria has been granted a special temporary permit until the end of 2024 to continue imports of crude oil and petroleum products by sea.

EU member states heavily dependent on Russian pipeline oil also receive a temporary exemption from imports of Russian crude by pipeline until the EU Council decides otherwise.

“However, member states benefiting from this exemption will not be able to resell such crude oil and petroleum products to other member states or third countries,” the Commission said.

These member states include the Czech Republic, Hungary and Slovakia. Hungary has blocked a decision on the embargo for weeks after the European Commission proposed a total ban on all Russian oil imports by the end of the year. The original proposal was reduced to an agreement to ban maritime imports by the end of the year, with an exemption from pipeline oil for the time being.

As a much more far-reaching measure in the EU sanctions package, it would also ban EU operators from insuring and financing oil shipments to third countries after a six-month wind-down period.

“This will make it particularly difficult for Russia to continue exporting crude oil and petroleum products to the rest of the world, as EU operators are important providers of such services,” the European Commission said.

The UK is also likely to join the insurance ban after the UK and the European Union reportedly agreed to jointly close Russia’s access to oil cargo insurance. The UK is home to a club of insurers that covers 95% of the global oil cargo insurance market.