Western insurers continue to cover Russian oil despite sanctions

Several Western insurers have offered coverage for tankers carrying Russian oil, Reuters reported, citing shipping and insurance data.

The report noted that Western insurers are only allowed to insure Russian crude oil tankers if the commodity sells for $60 a barrel or less. However, the average price of Russia’s flagship — and cheaper — Urals blend was $69.40 a barrel, according to LSEG data cited by Reuters.

Insurers providing cover for Russian crude ships included American Club, West of England and Gard – a company based in Norway – insured ten tankers loaded with Rosneft crude bound for Asia. All tanks were insured this year.

The insurance industry has been an important tool for the EU and US in enforcing sanctions against Russia following the 2022 incursion of Russian troops into Donbass. Under a price cap agreed by the G7, Western insurers could legally cover tankers carrying Russian crude only as long as it sold for $60 a barrel or less.

Insurers noted early on that enforcing the price cap would be a significant challenge, so most of them simply refused to cover any tankers carrying Russian crude. This, however, did not stop the export of goods from Russia. Russian insurers as well as companies from China and India stepped in to provide the necessary coverage and keep the oil flowing.

Sanctions have generally failed to achieve their goal of stifling the Russian economy, with the World Bank adding Russia to its list of high-income countries a month ago for the first time since 2015. Trade has been among the main contributors to this development. , growing 6.8 percent last year, the World Bank said. The financial industry – another major target for Western sanctions – grew by 8.7% last year, the WB also said.

By Irina Slav for Oilprice.com

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