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The UK and EU have agreed for an embargo on insuring vessels carrying oil from Russia, in an effort to keep Moscow out from the important Lloyd’s of London insurance market and restrict its ability to export crude, reported Financial Times, citing British and European officials.

This ban forms a part of the new package of EU sanctions on Russian oil exports.

Brussels agreed to impose a ban on most of oil shipments from Russia on 31 May, and the involvement of the UK now means that insurance for Moscow’s exports may go to smaller markets.

There has been a concern that the EU alone imposing an insurance ban would imply more business to international market of London.

A senior commission official was quoted by FT as saying: “There is a level playing field issue if London keeps on providing insurance and then a lot of it goes via Lloyd’s of London.”

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Although European Commission president Ursula von der Leyen announced the measure on shipping of Russian oil, the decision by London paves way for the new sanctions package.

Greece and Cyprus only agreed to this ban after a commitment from the UK. Both these countries have huge shipping sectors.

Even though the UK government refused to comment, sources said that an announcement was impending.

Senior officials in the Lloyd’s market have cautioned officials in Brussels and Westminster that  this may have a wider economic consequences as ports in Russia are also a conduit for Kazakhstan oil and the latter does not come under sanctions.

According to a senior commission official, G7 countries are working towards an insurance ban, which would not come into effect for six months.

Price of Brent crude has jumped to almost 60% this year following Russia’s military incursion on Ukraine.

Russia is the third-biggest crude producer in the world and has so far found buyers for its oil, including China, India and Turkey.

Exports of Russia’s refined products have dropped.

The surge in energy prices has fuelled inflation across the world this year.