(Reuters) – The European Commission has proposed to ban in a month 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 intended to paralyze the country’s oil industry.
Provided the proposal is approved by EU governments, all insurance, finance and freight services for Russian oil transportation would be banned in a month, the source said, declining to be named because of the sensitivity of the issue.
The ban would apply to Russian oil exports worldwide, which would potentially affect Moscow̵7;s ability to find alternative buyers after the EU stopped buying Russian oil.
If approved, the EU embargo on oil would take effect in six months, without any intermediate measures, both for new spot market contracts and existing long-term contracts, the source said, adding that expectations are that purchases would decrease before the deadline.
A similar embargo on Russian coal, imposed by the EU in April, took effect immediately for the spot market and had a four-month settlement period for existing contracts.
The ban on shipping and financial services for Russian oil would only apply to EU companies.
A number of companies outside the EU, with many of the largest based in Bermuda, offer seaborne oil transportation. Brokerage is also offered by many companies outside the EU.
Several insurance companies have already suspended some of their dealings with Russia since it invaded Ukraine on February 24 in what the Kremlin calls a “special military operation.”
The source said that the ban would have a “cooling” effect on the Russian oil trade and could also lead to self-sanction, which means that companies can apply it even if it is not directly subject to the embargo.