The oil shipment could soon be stranded at sea if G7 leaders fail to get details from insurers about the upcoming – but undefined – price cap mechanism on Russian crude oil, senior officials told Reuters. industry leaders this week.
The price cap plan – although it can hardly be called a plan at this stage – is expected to come into effect on December 5, after Canada, France, Germany, Italy, Japan, the Kingdom The United States and the United States agreed to restrict buyers in the group to buying crude oil from Russia only if it could be purchased below a set minimum.
The plan, if the G7 spells out the details, would seek to limit the revenue Russia derives from the sale of crude oil, while allowing those in need to continue buying oil from the sanctioned country.
With only three and a half weeks before the measure comes into force, the industry is calling for clarity.
A lingering question, according to Reuters sources, is that insurers could discover that a shipment of oil en route has actually been sold at a level that exceeds the agreed price cap. As things stand, insurers would have to take out cover for the cargo and the buyer wouldn’t accept the delivery – what happens after that hasn’t been resolved yet and could leave the cargo stranded at sea, with great environmental risk.
“If time is too short, I think everyone will have a plan B to reduce risk, to terminate, to stay away, not to perhaps enter into new contracts until there is a some clarity,” said George Voloshin, global financial crime expert at ACAMS. , the Association of Certified Anti-Money Laundering Specialists told Reuters. “It will probably be quite messy.”
A European Commission told Reuters the EU was aware industry was seeking more details, but the matter needed to be addressed specifically by the G7.
US State Department Ambassador James O’Brien said the G7 will have the details ready.
By Julianne Geiger for Oilprice.com
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