By Jonathan Saul and Gleb Stolyarov
LONDON (Reuters) – A group of Western insurers have offered cover to tankers carrying Russian crude, keeping oil flowing after many in the trading sector pulled out for fear of breaching the rules of a G7 price cap, data from traders and shippers.
Reuters data shows that five insurers, including American Club, Luxembourg’s headquarters in western England and Norway’s Gard, provided cover for 10 tankers sailing from Russia to Asia this year.
American Club and West of England provided insurance for two ships – the Gioiosa and the Orion I – that made similar voyages in early 2024.
Both ships took on crude oil from Russian state oil company Rosneft in Russia’s Baltic Sea and sailed to China, the data showed.
American Club said the ship, flying the Panamanian flag, was on the cover list. West did not comment on specific tankers.
Norway’s Gard, which data showed it was a separate ship, also declined to comment on specific vessels.
The three nonprofits, which insure ships against oil pollution, injury and loss of life, say they are providing a service to their members.
The size of ongoing provisioning by Western insurers to cover specific Russian oil deals has not previously been reported since the cap was imposed in 2022 after the war in Ukraine.
The cap, imposed by the Group of Seven industrialized nations and their allies to limit Moscow’s ability to finance the war, only allows Western insurers and ships to participate in Russia’s oil trade if oil is below $60 per barrel is sold.
Many of those who stopped trading such cargoes said they did so because they could not be sure of the price of the oil carried by the ships they insured.
Russia, which has banned its companies from adhering to the price ceiling, sold its flagship Urals crude at Baltic ports this year for an average of $69.4 a barrel, well above the price ceiling, LSEG data show.
Insurers and ship owners are not expected to investigate the price.
Instead, Western enforcement agencies, including the U.S. Treasury Department, are requiring insurance companies to request so-called certificates from the parties buying and selling the crude whose oil changed hands below the price ceiling.
‘BROKEN’ PROCESS
The International Group (IG) of P&I Clubs – which provides insurance for 90% of the world’s fleet – said in April that its attestation process was flawed and risked exposing its members to price cap breaches.
The IG did not respond to a request for comment on the risks to this story.
The insurers identified by Reuters separately said they relied on attestation letters from participants in the trade that all work was legal and compliant with Western sanctions.
Reuters was unable to contact either party as they were not named due to commercial confidentiality.
IG member American Club said it did not have direct access to pricing information when providing coverage for the Gioiosa tanker.
Gard said it relied on price cap certificates and also checked additional data and information sources. Both companies have referred further questions about the limit to the IG.
The other insurers for Russian oil included New Zealand’s Maritime Mutual and IG member London P&I Club, a Reuters survey of shipping and trading data showed.
Maritime Mutual and London P&I did not respond to a request for comment on the potential risks.
However, Maritime Mutual, which is not part of the IG Group, provided Reuters with a copy of its Russian oil insurance policy and a blank copy of an attestation letter stating that coverage will be withdrawn if a shipment violates the price cap.
The letter asks a company seeking coverage – usually a charterer or shipper – to tell its insurer the name of the ship, the port and the date of loading and unloading.
It asks the charterer to confirm that the shipment complies with the price ceiling, but does not require the price paid to be stated anywhere in the certificate.
West also told Reuters that the price cap regime treats ship owners and insurers as indirect participants in the transactions, known as level three, and therefore they are not required to verify prices.
“The shipper/trader will never give away that (price) information and their margins,” Tony Paulson, West’s head of Asia and business director, told a Lloyd’s List podcast last month.
Gard, West P&I, American Club said they would terminate coverage if information emerged that the statement was inaccurate and the price was over the limit.
