Several Western insurers have continued to provide coverage for tankers carrying Russian oil, Reuters reported, citing shipping and insurance data. According to the report, Western insurers are only permitted to insure tankers with Russian crude if the cargo is sold for $60 per barrel or below. However, the average price of Russia’s flagship Urals blend has been $69.40 per barrel, based on LSEG data cited by Reuters.
Among the insurers providing coverage for these vessels are the American Club, West of England, and Gard, a Norway-based company. These companies insured ten tankers loaded with crude oil produced by Rosneft and bound for Asia. All the tankers were insured this year.
The insurance industry has been a crucial 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 upon by the G7, Western-based insurers could only legally provide coverage for tankers carrying Russian crude if it sold for $60 per barrel or less.
Insurers noted early on that enforcing the price cap would be a significant challenge, leading many to simply refuse to cover any tankers carrying Russian crude. This, however, did not stop the export of oil from Russia. Russian insurers, as well as companies from China and India, stepped in to provide the necessary coverage, ensuring the continued flow of oil.
Overall, the enforcement of sanctions has failed to achieve its objective of stifling the Russian economy. The World Bank recently added Russia to its high-income country list for the first time since 2015. Trade was a major contributor to this development, showing a 6.8% increase last year, according to the World Bank. The financial industry, another significant target for Western sanctions, grew by 8.7% last year, the World Bank reported.