EU ditches ban on oil tankers that ship Russian crude to third countries, but keeps restrictions on insurers, report says

• The EU will drop a planned ban on vessels that ship Russian oil, but still target insurers, a report said Monday.
• Last week, draft legislation showed EU lawmakers would target any ship that carried Russian oil anywhere in the world.

The European Union has already watered down its latest round of proposed sanctions aimed at Russia's energy sector.

The bloc has ditched plans to stop EU-owned vessels from shipping Russian oil to countries outside the region, according to people familiar with the matter cited in a Bloomberg report Monday.

Last week, the EU proposed an embargo that would stop all imports of Russian of crude and refined products within six months. There were exceptions from the measure for some land-locked member countries, such as Hungary and Slovakia, that rely almost solely on shipments via pipeline.

In addition, the draft legislation suggested the EU would also clamp down on Russian oil exports going anywhere in the world, by forbidding anyone from loading, shipping, insuring or financing such cargoes.

After a weekend of negotiations and strenuous pushback from Greece, which ships more Russian oil than any other EU country, European lawmakers softened their approach, per Bloomberg. They dropped the planned ban on transporting oil, but retained the proposed restrictions for insurers, it said.

Brent crude futures extended earlier losses Monday, falling by 2.3% on the day to around $109.84 a barrel. Meanwhile, WTI futures lost 2.5% to trade around $107.03 a barrel.

"Western policy makers fear a possible price spike in oil if they impose a hard embargo on Russia, which would be most effective in helping end this war quickly," Robin Brooks, chief economist at IIF, said in a tweet Monday.

Existing European sanctions have already shut at least 1 million barrels a day of Russia crude out of the market. That has left it seeking out buyers elsewhere, particularly in India and China, where refiners are able to snap up Urals crude at rock-bottom prices.

The EU accounts for almost half of all Russia's roughly 7 million barrels per day in oil exports, and its proposed embargo alone means it could eliminate all of that supply over the coming six months.

"The EU started the year importing 3.4 million barrels per day of crude oil from Russia, but we estimate that flows slowed down to around 2.7 million barrels per day during March and April," Bjørnar Tonhaugen, head of oil market research at energy consultant Rystad Energy, said.

"The reduction in demand for Russian barrels from the EU will not be fully compensated by alternative markets such as China and India. Russia will try to redirect as much volume as possible from the West to the East, but this effort will be limited by infrastructure constraints," he said.

Limiting the ban to insurance will still throw up a significant obstacle to Russian oil exporters. Coverage extends to anything from delays due to poor weather, to potentially lethal oil spills and other environmental and personal hazards. Any EU restriction would likely severely limit the number of providers willing to step up and offer insurance.

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