Experts have downplayed the threat by Vladimir Putin, Russian President, to reduce oil exports to countries that adhere to a price limit on their fuel.
Russia has a limited fleet of oil carriers because more than 90% of the world’s oil tankers are owned by or insured by Western countries via the International Group of Protection and Indemnity Clubs.
Russia has around 100 ships in its fleet. However, Russia will require more than 240 to meet its 2021 demand of 4.7mln barrels per day, according to Rystad Energy analysts.
Look who blinked first #Russian crude oil is being shipped to #India on tankers insured by western companies, in the first sign #Moscow has reneged on its vow to block sales under the G7-imposed price cap. https://t.co/DkF8K37SDI via @FT https://t.co/PvVwxGgP4r
— Share_Talk ™ (@Share_Talk) December 16, 2022
Liu Gan, a member of the Eurasia Institute in China’s State Council, said that tankers also need “the required insurance” if they want to transport their cargo.
Ships without required insurance are not allowed to use shipping channels, which include the Suez Canal and Danish Straits.
According to the Financial Times, Moscow has therefore exported millions of barrels of crude oil by using west-insured tankers since the price cap was in effect. This indicates its continued dependence on these vessels.
According to the FT, this oil was also found in ships bound for Indian refineries and apparently sold below the price cap.
The price of Russian crude oil has been capped by the European Union, G7 countries, and Australia, starting 5 December. This means that they will not accept any prices higher than this.
In March, the Russian president threatened to cut oil exports if countries didn’t pay in roubles. This was in an effort to support the currency that had been weakening since the invasion of Ukraine.
It has been subject to a flurry of sanctions by countries that oppose the aggression since the February invasion.
The European Commission claims that EUR300bn worth of Russian central bank reserves have been frozen across Europe, and EUR19bn of personal wealth has been seized.
