UK-based International Group of P&I Clubs, a global insurance company, says a growing shadow fleet is making it less and less viable to police the G7 price cap on Russian oil, Bloomberg News reports, citing a briefing to the UK government.
The UK-based insurance group notes that 800 oil tankers that it used to insure have switched over to the shadow fleet to transport sanctioned Russian oil being sold above the $60 price cap.
Three weeks ago, Argus Media data cited by Bloomberg indicated that Russia’s flagship Urals grade crude was being exported for around $75 per barrel, or $15 above the G7 price cap of $60, which took effect at the end of 2022 when the European Union imposed an embargo on Russian seaborne crude imports.
By the end of last year, nearly all of Russia’s crude was selling for above the price cap, which enables third countries to utilize Western insurance and financing as long as cargoes are sold at or below the cap.
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UK-based International Group of P&I Clubs, a global insurance company, says a growing shadow fleet is making it less and less viable to police the G7 price cap on Russian oil, Bloomberg News reports, citing a briefing to the UK government.
The UK-based insurance group notes that 800 oil tankers that it used to insure have switched over to the shadow fleet to transport sanctioned Russian oil being sold above the $60 price cap.
Furthermore, the group said, it is impossible for an insurance company to determine whether traders are adhering to the G7 price cap, noting that the policy “appears increasingly unenforceable as more ships and associated services move into this parallel trade,” Bloomberg quoted the group as saying, adding that it “is concerned that increasing responsibility and obligations on companies in the G-7 coalition will result in a further migration of trade activities and ancillary services outside of the G-7”.
Three weeks ago, Argus Media data cited by Bloomberg indicated that Russia’s flagship Urals grade crude was being exported for around $75 per barrel, or $15 above the G7 price cap of $60, which took effect at the end of 2022 when the European Union imposed an embargo on Russian seaborne crude imports.
By the end of last year, nearly all of Russia’s crude was selling for above the price cap, which enables third countries to utilize Western insurance and financing as long as cargoes are sold at or below the cap.
Citing the UK government briefing, Bloomberg said the insurance group was critical of London’s efforts at enforcing the price cap, suggesting that the onus has errantly fallen on insurance groups, whose members “should not be expected to be an extended arm of enforcement” for sanctions, particularly without deep talks with China and India, the key buyers of below-cap Russian oil.
By Charles Kennedy for Oilprice.com
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