The Russian shadow fleet is so large that the price cap no longer applies

The International Group of P&I Clubs, a global insurance company based in the United Kingdom, says a growing shadow fleet is making it increasingly less profitable to control the G7 price cap on Russian oil, Bloomberg News reports, citing a briefing at British government.

The UK-based insurance group notes that 800 tankers it insured have switched to the shadow fleet to transport sanctioned Russian oil sold above the $60 price cap.

Furthermore, the group said it is impossible for an insurance company to determine whether traders are complying with the G7 price cap, noting that the policy “appears increasingly unenforceable as more vessels and associated services move into this parallel trade,” Bloomberg said, adding that he “fears that increased liability and obligations for G-7 coalition companies will result in further migration of business activities and ancillary services outside the G-7.” -7”.

Insurance companies are afraid that the number of shadow oil tankers, who ignore G-7 orders and turn elsewhere for insurance and shipping services, is such that Western oil companies may lose control of the market, thus losing customers from a side, but not being able to control the market on the other.

Three weeks ago, data from Argus Media, cited by Bloomberg, indicated that Russia’s flagship Urals-type crude was being exported at around $75 a barrel, or $15 higher than the G7 price ceiling of $60. which came into force at the end of 2022 when the European Union imposed an embargo on imports of Russian crude by sea.

At the end of last year, almost all Russian crude was sold above the price cap, which allows third countries to use Western insurance and financing as long as cargoes are sold at or below the cap maximum. So third countries simply do not use Western maritime services and use an increasingly larger and richer shadow fleet. Consequences of intelligent sanctions.

Citing the British Government briefing, Bloomberg said the insurance group criticized London’s efforts to enforce the price cap, suggesting that the burden had wrongly fallen on insurance groups, whose members “should not expect to be a extended enforcement arm” for the sanctions, especially without in-depth talks with China and India, the key buyers of Russian oil under the roof.

Now insuring the oil tankers are companies about which little is known and which, among other things, may not guarantee against the damage of a possible disaster. If not they even travel with false documents, as has happened recently.