A group of Western insurers said the Russian oil price cap has become unworkable and has only encouraged more ships to join the shadow fleet, according to Reuters.
The international P&I group said that the price cap has not had much success since its introduction two years ago, as Russia has switched to its fleet, as well as to tankers that are outside the control of the West.
The statement was presented as written evidence at a hearing in the UK Parliament. The group says it comprises 12 third-party marine liability insurance companies that cover 87% of the world's ocean tonnage.
“The oil price cap appears increasingly unenforceable as more ships and associated services move into this parallel trade. We estimate around 800 tankers have already left the International Group Clubs as a direct result of the introduction of the oil price cap,” the statement says.
Price ceiling
The Group of Seven (G7) approved an upper limit on Russian oil prices to limit the Kremlin's revenue for the war in Ukraine while maintaining the flow of Russian oil to avoid a spike in energy prices.
The restriction allows Western shippers and insurers to participate in the Russian oil trade from December 2022, provided that the oil is sold at a price below $60 per barrel. However, Russia circumvents the $60 price ceiling and sells oil at a higher price through its shadow fleet.
Russia's revenues from oil and gas sales are expected to almost double year-on-year in April 2024 due to rising prices and reach $14 billion.
