LMA advises insurers as UK and EU cut Russian oil price caps

By Ashish Tiwari

Aug 14 - (The Insurer) –The Lloyd’s Market Association (LMA) on Thursday advised insurers to review their exposure to Russian oil as the UK and EU prepare to lower their price caps on Russian crude starting in September.

Starting September 2 in the UK and September 3 in the EU, the price cap for Russian oil will drop to $47.60 per barrel, which is below the $60 cap still in effect for U.S. entities. The EU has also introduced a mechanism to review its price cap every six months.

Transitional provisions allow UK insurers a 45-day wind-down for contracts signed before September 2, ending October 17, 2025. The EU provides a 90-day run-off for contracts before July 20, 2025, expiring October 18, 2025.

“This means that we will now have a situation where US parties will have a different price cap to comply with from the UK and EU, and the UK and EU will have slightly different transitional provisions until the changes now introduced take place," said Arabella Ramage, legal and regulatory director, LMA.

She also flagged that standard sanctions clauses in insurance policies could be triggered if U.S.-led contracts do not align with UK/EU requirements.

The split in price caps is the first time coalition partners haven’t moved in tandem, likely exposing UK and EU insurers to sanctions risks if compliance documentation cannot be obtained.

The association has urged underwriters, including those in hull, cargo, political risk, P&I, liability or reinsurance, to reassess ongoing risks, especially where contracts involve U.S. insureds or a U.S. lead insurer.

Insurers are also contending with threats of U.S. secondary sanctions that could impact those dealing with Russian oil, which also includes receiving ports and states.

These guidelines come amid tightening global sanctions on Russia and shifting oil flows, driven by regulatory changes and wider geopolitical uncertainty in the energy trade.