Insurers have raised concerns that the price cap on Russian oil has become unenforceable, leading to an increase in ships joining a shadow fleet, thereby circumventing G7 sanctions aimed at Vladimir Putin’s regime.
The International Group of P&I Clubs noted that the price cap, which aims to restrict sales of Moscow’s crude oil to under $60 a barrel, has seen limited success.
The G7 nations endorsed this measure during the Ukraine conflict to ensure the continued flow of Russian oil and prevent spikes in energy prices. The cap is intended to maintain the flow of Russian oil to prevent a surge in energy prices.
However, in testimony given to MPs today, the group, consisting of 12 marine third-party liability insurers, stated that the majority of vessels trading in Russian oil are operating under the laws of jurisdictions where the price cap is either irrelevant or ignored.
The group explained, “As long as the owners and operators of vessels transporting Russian oil and oil products do not fall under G7 jurisdiction, they are legally free to operate according to the laws applicable to them.”
Their report further noted, “The oil price cap is proving increasingly unenforceable as more ships and related services engage in this parallel market. We estimate that approximately 800 tankers have left the International Group Clubs directly due to the implementation of the oil price cap.”
