President Donald Trump's decision to temporarily ease sanctions on Russian diesel is creating fresh legal and underwriting questions for marine insurers and brokers, as transactions authorized by Washington may still face restrictions in the UK and European markets.
The move follows Trump's surprise agreement with Russian President Vladimir Putin to allow Russian diesel shipments into the US and global markets, aimed at easing elevated fuel prices.
On October 9, the US Treasury's Office of Foreign Assets Control (OFAC) issued General License 135, authorizing specified transactions involving the sale, delivery, offloading and importation of Russian-origin diesel through April 7, 2027.
However, the waiver does not override restrictions imposed by other jurisdictions, potentially complicating insurance arrangements involving international underwriters, shipping companies and intermediaries.
One legal expert told Insurance Business that the fragmented sanctions environment presents significant challenges for logistics firms – and the insurance carriers underwriting their policies.
"If you have a transaction that engages with the UK market, the European market and the US market, you have to get licenses from all of them. One does not suffice," said Mahmoud Abuwasel, partner – disputes at Wasel & Wasel, referring to transactions requiring separate regulatory authorizations.
"You can't engage with the European market and say, 'I've got a UK license for this.' You need to get both. Likewise with the US."
The distinction is particularly important for marine insurance placements, where vessels, cargo owners, insurers, reinsurers and brokers may operate under different regulatory jurisdictions.
The UK maintains restrictions on maritime transportation and associated services for Russian-origin petroleum products, subject to exemptions including its oil price cap framework. European Union rules similarly restrict maritime transportation and insurance services for Russian petroleum products sold above applicable price caps.
Abuwasel described the overlapping requirements as "the labyrinth that the private market has to deal with." Brokers arranging coverage for diesel shipments will need to establish which sanctions regimes apply to each transaction and whether relevant exemptions or licenses permit the services involved.
He explained that the willingness of other governments to authorize transactions permitted by Washington could depend heavily on their broader geopolitical positions.
"If the UK government disagrees with the direction of the US government on this issue, maybe the policy direction for sanctions matters would be not to grant licenses and to penalize anyone who tries to engage with the six-month exemption process by the US," he said. "So, the tools are there, but the tools are hostage to geopolitics."
The uncertainty is compounded by political opposition in Washington. According to the Associated Press, Republican and Democratic lawmakers have challenged Trump's agreement, questioning its compatibility with legislation passed in 2022 banning Russian energy imports. Treasury Secretary Scott Bessent has defended the administration's authority to proceed with the arrangement.
Beyond regulatory compliance, Abuwasel identified another potential complication: whether temporarily removing sanctions could revive contractual obligations that parties previously declined or suspended because of legal restrictions. He explained that contractual obligations can depend on whether a restriction existed when an agreement was entered into or arose afterward.
The temporary waiver raises questions about whether parties can continue relying on sanctions as justification for non-performance during the period of US authorization. These questions may become relevant when reviewing existing coverage arrangements, sanctions exclusions and contractual commitments connected with previously restricted shipments.
Abuwasel also suggested the waiver could have competing effects on insurance pricing. In some cases, removing US licensing requirements could reduce administrative costs and simplify transactions. However, conflicting international rules could make other placements more resource-intensive.
"It could increase insurance rates as insurers have to spend more time and money dealing with this new reality," Abuwasel said. "Ultimately, underwriters do charge for the amount of time they put into putting together an insurance package."
He suggested insurers would ultimately have to weigh the commercial benefits of participating in newly authorized transactions against their compliance expenses and the possibility of further policy changes.
