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Policy

EU Ban Puts Tankers on Collision Course

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  • An EU ban on insurance and financing for tankers that carry Russian oil come winter will make it near impossible for many shippers to move this oil.
  • Moscow and friends could try to assemble a fleet of non-Western tankers, which could perhaps handle much of Russia’s crude, but not the refined products.
  • The EU is discussing a possible loophole, in which tankers could carry Russian oil if bought at a discount under a potential US-backed "price cap" — but traders still see a supply crunch in the making.

An EU shipping insurance ban is creating a huge obstacle to export Russian crude oil and refined products a couple months from now. This could create massive price spikes for oil worldwide, on top of expensive natural gas. Under the ban, Russia’s total 5 million barrels per day of seaborne fuel exports — 3 million b/d of crude oil and 2 million b/d refined products — must be shipped on tankers without any ties to EU insurance and financing. But the bulk of the world’s fleet has ties to the EU — and UK — banks, brokers and insurers. Brokers say there won’t be enough tankers to handle Russia’s oil.

Topics:
Oil Tankers, Crude Oil, Oil Products, Policy and Regulation, Sanctions, Ukraine Crisis
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