New legislation introduced today will prevent countries from
using the UK’s services to transport Russian oil unless it is
purchased at or below the Oil Price Cap set by the Price Cap
Coalition of the G7 and Australia.
The move follows the decision made by the G7 Finance ministers in
September who committed to the price cap as a way of undermining
Putin’s ability to fund his war in Ukraine through inflated
global oil prices, while ensuring that third countries can
continue to secure affordable oil. The UK and its coalition
partners will not make use of the cap, as they have introduced an
import ban on Russian oil.
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.
Insurance is one of the key services that
enables the movement of oil by sea, particularly
protection and indemnity (P&I) insurance which
relates to third-party liability claims – the UK is a
global leader in the provision of P&I cover,
writing 60% of global cover.
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. To enforce the scheme the Treasury has set up a
new team, based in the Office of Financial Sanctions
Implementation. This team will set up the licensing and
enforcement system for the Oil Price Cap; engage with industry to
ensure readiness for the cap; and monitor the level and impact of
the cap on an ongoing basis.
Chancellor of the Exchequer said:
“We continue to stand by Ukraine in the face of Putin’s barbaric
and illegal invasion. We’ve banned the import of Russian oil into
the UK and are making good progress on phasing it out completely.
This new measure continues to turn the screws on Putin’s war
machine, making it even tougher for him to profiteer from his
illegal war.”
Contact information
HMT Press Office
020 7270 5238
pressoffice@hmtreasury.gov.uk
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Notes to editors
- The legislation laid on 3rd November is a statutory
instrument made under the Sanctions and anti-Money Laundering Act
2018, amending the Russian (Sanctions) (EU Exit) Regulations
2019.
- The legislation will be followed by the issuing of a General
Licence, which will provide the oil price cap exception to this
legislation and enable UK services to continue facilitating the
transport of Russian-origin crude oil from the 5th December and
refined oil products from the 5th February, from a place in
Russia to a third country as well as between third countries when
purchased at or below the oil price cap level.
- The issuing of this General Licence will be accompanied by
general guidance, expected shortly, which will be published by
the Office of Financial Sanctions Implementation, and a programme
of industry engagement events and opportunities.
- This legislation also brings forward the date of the UK’s oil
import ban from the end of December to 5th December.
