Western Insurers Continue to Cover Russian Oil Despite Sanctions

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

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

The insurers that provided coverage for the vessels with Russian crude included the American Club, West of England, and Gard—a Norway’ based company—insured ten tankers loaded with crude oil produced by Rosneft and bound for Asia. All tankers were insured this year.

The insurance industry was an important tool for the EU and the U.S. in enforcing sanctions on Russia following the 2022 incursion of Russian troops into the Donbass. Under a price cap agreed by the G7, Western-based insurers could only legally provide coverage for tankers carrying Russian crude on the condition that it sold for $60 per barrel or less.

Insurers noted early on that the enforcement of 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 the commodity from Russia. Russian insurers as well as companies from China and India stepped in to provide the necessary coverage and keep the oil flowing.

The enforcement of sanctions overall has failed to achieve its objective of stifling the Russian economy, with the World Bank a month ago adding Russia to its high-income country list, for the first time since 2015. Trade was among the main contributors to this development, booking a 6.8% increase last year, the World Bank said. The financial industry—another big target for Western sanctions—grew by 8.7% last year, the WB also said.

By Irina Slav for Oilprice.com

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