Tankers risk being marooned at sea if the G7 leadership fails to clarify details of the upcoming price cap mechanism on Russian oil with insurers, senior industry executives told Reuters this week.
With just three weeks to go before the measure comes into force, the shipping industry has no clarity on how it will operate.
The Group of Seven leading economies – the US, Canada, France, Germany, Italy, the UK and Japan – agreed in September to enforce a price ceiling on Russian oil in a bid to curb Moscow’s revenue from energy exports. Banking, insurance, and shipping firms will be banned from providing services to Russian companies that sell oil at a price above the set limit from December 5.
While the clock is ticking the question remains what will happen if insurers find out that an oil shipment in transit at sea was actually sold above the price cap, the outlet asked. Experts fear this could lead to the withdrawal of insurance cover and the customer would not accept the cargo.
“If the time is too short, I think everyone will have a Plan B to de-risk, terminate, stay away, not maybe conclude any new contracts until there is some clarity,” George Voloshin, Global Anti-Financial Crime Expert at the Association of Certified Anti-Money Laundering Specialists (ACAMS) said.
It’s also unclear for buyers and traders what to do in case insurance is pulled when an oil-laden tanker is already en route. Voloshin warned that “it will probably be quite messy” as there’s a great risk that an oil cargo potentially exposed to sanctions would be stranded near ports posing an environmental threat and causing a financial and logistical nuisance.
A European Commission official told Reuters that Brussels was aware that businesses were looking for details of their new obligations but said that the issue should be addressed at the G7 level.
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