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Russian Oil Embargo May Not Apply to Pilotage Services in The EU.

London, Tuesday, 4 October 2022

EU is seeking input on exempting maritime pilot services from the ban on Russian oil.

A proposal to exempt maritime pilot services has been made in order to maintain safety as the European Union (EU) prepares for a ban on Russian oil imports to start in December.

The purpose of the exception is to enable ships carrying Russian oil to use marine pilots to steer through choke areas where pilotage is usually used to ensure the safety of passage.

Pilot services had been included in a prohibition on the provision of technical support required to transport the oil in the EU's adoption of the Russian oil embargo back in May.

For instance, to reduce environmental dangers, Denmark's maritime authorities advise shipowners and charters to use pilot services when tankers pass through Danish straits. Danish straits are used by the majority of oil exports leaving Russian ports on the Baltic Sea.

The exemption proposal will reportedly be presented to EU ambassadors this week in Brussels for consideration, according to Bloomberg. It is a component of the eighth set of sanctions against Russi that the European Commission issued last week. The package is the EU's answer to Russia as Moscow escalates its threats to use nuclear weapons and invade four Ukrainian areas that are currently under occupation.

Global cap on oil prices; the marginal cost of producing Russian oil is $60 per barrel, according to some supporters of the plan.

The current proposed penalties include a restriction on the price of oil for third-world nations, which is a significant but debatable component. The G7 countries have already decided to use insurers to impose an oil price restriction.

The EU's riskier plan to restrict imports of Russian oil was rejected in favour of the US-supported oil price ceiling. Russian oil shipments might be reduced by three to five million barrels per day, according to US Treasury officials, resulting in a sharp increase in global oil prices.

An innovative plan known as the oil price cap seeks to forbid transportation and insurance firms from transporting Russian oil unless they have purchased it at or below a predetermined price level. The marginal cost of producing Russian oil is $60 per barrel, according to some supporters of the plan. In such a situation, the revenues are certain to decline over time, depriving Moscow of enormous gains from the oil trade.

The price cap is viewed as a surefire way to penalise Putin while maintaining the flow of Russian oil because Russia mainly relies on shipping and insurance companies located in the EU and the G7 nations to move its crude.

(Report by: The Decision Maker – International Maritime editors)


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