Western insurance companies cover Russian oil tankers despite sanctions

Western insurance companies have provided cover for 10 oil tankers, the transportation of which from Russia to Asia started this year.

Source: Reuters

Details: A group of Western insurers provided cover for tankers with Russian oil after G7 imposed a price cap.

Five insurance companies, such as American Club, West of England with a headquarters in Luxembourg, and the Norwegian Gard company, facilitated cover for 10 tankers sent from Russia to Asia this year.

The restrictions imposed by G7 and its allies in order to weaken Russia’s funding of the war allows Western insurers and vessels to participate in Russian oil trade only if the oil is sold at a price lower than US$60 per barrel.

Reportedly, Russia, which had banned its companies from adhering to the price cap, sold the Urals flagman oil in Baltic ports for US$69.4 per barrel on average.

American Club and West of England insured two vessels, Gioiosa and Orion I, which took on board the oil from the Rosneft Russian company in Russia’s Baltic at the beginning of 2024 and sailed to China.

American Club stated it did not have access to the information about oil prices when the Gioiosa tanker was being covered.

Gard reported that it relied on the confirmation of the price cap and checked additional sources of data and information. Both companies made additional requests concerning the restrictions to the International Group (IG) of P&I Clubs – which provides insurance for 90% of the world's fleet.

The insurers stressed that they rely on the attestation letters from the participants in the trade that all work was legal and complied with Western sanctions.

Background:

• The Viktor Bakaev tanker transports oil to China from the Baltic, checking the sanctions of the G7 countries which try to limit Russia’s oil fleet.
• The Oxis supertanker received about a million barrels of Russian flagman Urals oil from another vessel. This vessel was one of the two ships belonging and used by a Russian state tanker company Sovkomflot.

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