EU proposes ban on shipping, insurance services for Russian oil

(Reuters) — The European Commission has proposed to ban in a month’s time all shipping, brokerage, insurance and financing services offered by EU companies for the transport of Russian oil worldwide, an EU source told Reuters on Wednesday.

The measure is part of a proposed embargo on Russian oil that is meant to cripple the country’s oil industry.

Provided the proposal gets the approval of EU governments, all insurance, finance and shipping services for Russian oil transport would be banned in a month's time, the source said, declining to be named because of the sensitivity of the matter.

The ban would apply to Russian exports of oil worldwide, potentially affecting Moscow's ability to find alternative buyers after the EU stops buying Russian oil.

Should it be approved, the EU's embargo on oil would take full effect in six months' time, with no intermediate measures, both for new contracts in the spot market and existing long-term contracts, the source said, adding that the expectation is that purchases would decline before the deadline.

A similar embargo on Russian coal, imposed by the EU in April took immediate effect for the spot market and had a four-month wind-down period for existing contracts.

The ban on shipping and financial services for Russia oil would apply only to EU companies.

A range of non-EU companies, with many of the largest based in Bermuda, offer seaborne transport for oil. Brokerage is also offered by many non-EU companies.

Several insurers have already suspended part of their business with Russia since it invaded Ukraine on Feb. 24 in what the Kremlin calls a “special military operation.”

The source said the ban would have a “chilling” effect on Russian oil trade and could also lead to self-sanctioning, meaning that companies could apply it even if not directly targeted by the embargo.