Despite the imposed restrictions, several insurance firms continue to provide coverage for Russian oil tankers, undermining the effectiveness of sanctions aimed at limiting Russia’s financial flows.
According to data obtained from market participants and traders, at least five Western insurance companies, including American Club, West of England, and Norway’s Gard, continue to insure Russian oil tankers. This year, they have provided coverage for 10 tankers transporting oil from Russian ports to Asian countries, including China.
For example, the tankers Gioiosa and Orion I, insured by American Club and West of England, transported oil from the Russian state-owned company “Rosneft” to China at the beginning of 2024. These voyages took place when the average price of Urals oil at the time of loading was $69.4 per barrel, significantly exceeding the $60 per barrel price cap set by the G7 countries.
The sanctions imposed by the G7 were intended to reduce Russia’s financial ability to wage war in Ukraine. One of the key conditions of these sanctions was the establishment of a price cap on Russian oil, under which Western insurance companies could provide their services. However, Russia, having prohibited its companies from adhering to the price cap, continues to sell oil at higher prices.
Western insurance companies, for their part, claim they rely on documents provided by market participants to confirm the compliance of operations with sanctions. However, this raises doubts about the reliability of such confirmations, especially when it comes to significant financial transactions with a state that continues its aggressive actions against Ukraine.
The activities of insurance companies that continue to insure Russian oil tankers require stricter control and strengthened sanctions. The funds Russia earns from oil sales are used to finance the war in Ukraine.
Strengthening sanctions pressure is necessary to reduce Russia’s profits from oil exports and, consequently, its ability to finance military actions. It is crucial for Western countries to ensure that any circumvention of sanctions is stopped and that the financial flows fueling Russian aggression are cut off.
