Western oil insurers fear they may inadvertently help transport Russian crude oil that is selling above the $60-a-barrel price limit. This has been made possible as purchases and transactions have become opaque since the G7 coalition imposed a price cap in early December 2022. The risks are described by resource OilPrice.
The representatives of the Protection and Indemnity (P&I) company club confirm that the supplies they insure and support have been formally delivered without violating the price limit. But they fear that increasingly evasive practices by Russia and its new crude oil customers are obscuring the true price at which Russian raw materials and petroleum products are being sold.
As global oil prices surged after the unexpected OPEC+ production cut announced in early April, the price of Russia’s flagship oil, the Urals, soared to nearly $60 a barrel. ESPO grade, shipped from the Russian port of Kozmino in the Far East, has been trading steadily above $60 a barrel for several months since the embargo and oil price cap came into effect. EU/G7 on December 5.
In recent weeks, the US Treasury Department has warned US and Western insurers that they may have violated the price cap mechanism when servicing supplies shipped from the port of Kozmino. In general, Western insurers cannot be sure that they have blocked transactions on oil cargoes sold above 60 dollars a barrel.
We are certainly not in a position to determine the price of oil for worldwide deliveries.
Lars Lange, general secretary of the International Marine Insurance Union, told Reuters.
The problem for the EU and the US is confirmed by other sources. Shipowners and ocean freight insurers cannot reliably estimate the true price of Russian freight, says Mike Salthouse, external relations manager at the NorthStandard P&I Club.
If Russia wants to export its oil and sell it above the marginal price, it is in the interest of both the Russian exporter and the recipient not to disclose the actual price of the shipment.
said the official.
According to experts, the Russian Federation has nevertheless found a weak point in the legislation concerning the embargo and the price cap. From now on, we can no longer speak of circumventing sanctions, but of using loopholes in Western sanctions regulations, which makes it possible to make the export of a prohibited product “white” completely legal.
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