The Daily View: Mixed messaging

“WE ARE sending a clear signal: Russian oil is off the market,” explained the UK Chancellor Rachel Reeves on October 15.

The problem for shipping is the signal is not that clear.

Right now shipping exists in an uncertain state of compliance limbo.

Those identifying themselves as the good guys know Russian oil is both off the market and legally transportable, with the right attestations which may, or may not be wholly reliable, depending from where they came.

The rules, they argue, should be targeting the bad guys. Instead mainstream shipping is increasingly worried that ships can be specified even though they have not broken sanctions. From that it follows that any vessel engaged in a lawful trade involving Russia is now at risk of specification.

In the UK it seems that we have essentially moved to a “no Russia” footing, but the legislation and guidance don’t reflect that.

It is increasingly difficult to see what the intention is with respect to the oil price cap.

We are not the only ones who have been saying for a while that a full embargo, albeit with limited derogations akin to the model used by the US primary sanctions against Iran, would be a whole lot easier to comply with than the current complicated network of overlapping restrictions.

The problem is partly a lack of clarity over what governments want to achieve here. The political pressure from government to turn the crews on Moscow is real, but they have already sanctioned much of what could be considered legitimate targets.

There is a question mark over how much more the shadow fleet can grow and how many more ships can be sanctioned.

Western countries, mainly the EU and the UK, have added nearly 500 more tankers to their sanction lists this year. The search for targets is becoming trickier as the pool of sanctioned and shadow fleet vessels grows, and the concern is that the good guys are going to get caught up in the dragnet.

Such things are inevitably fluid and driven by political realities, rather than maritime efficiencies. But given the professed intention by the UK government to utilise industry expertise to inform policy, we would humbly suggest that it may be time to engage in a more meaningful way.

There is plentiful expertise available to explain how porous and conflicted the current approach is. Using that expertise to improve policy, rather than leaving it to circumvent bad rules, would be a good first step towards a genuinely effective public-private partnership.

Richard Meade
Editor-in-chief, Lloyd’s List

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