The entry into force of the European embargo on Russian oil and the capping of the price of Russian crude disrupt the maritime transport of black gold, already slowed down by new formalities linked to the insurance of tankers.
Since Monday, the European Union (EU) has indeed banned almost all deliveries of Russian oil by sea, a new round of sanctions against Russia because of its war in Ukraine.
Added to this is a price cap mechanism approved by the EU, the G7 and Australia, providing that only crude sold at a maximum of US$60 per barrel can continue to be delivered, and that beyond that, it will be prohibited for companies based in these countries to provide services allowing maritime transport, in particular insurance.
On paper, the plan is simple: hit Russia’s financial windfall by keeping its oil priced low instead of taking it off the market.
Although analysts agree that it is still too early to predict the impact, the first effects are already being felt.
Tanker traffic jam
Since Wednesday, oil tankers have been waiting in the Black Sea to be able to use the Bosphorus straits and the Dardanelles, under Turkish control.
Turkey now requires vessels wishing to use this essential trade route for the transport of Russian crude to prove that they are covered, including in the event of a violation of the capping mechanism, with the presentation of a “protection and indemnity insurance” ( P&I).
However, Western insurers refuse to provide a general commitment to all shipowners.
The London P&I Club assured on Monday that the “Clubs”, groups of insurers which pool their risks on these risky and expensive marine covers, “cannot and should not send” such a guarantee, because it would amount “to a violation of Western sanctions.
For Marcus Baker, global head of the Marine & Cargo division at Marsh, the P&I Clubs adopt a “pragmatic” attitude here.
All commercial vessels must indeed obtain this particular marine insurance, covering war risks, collisions or environmental damage such as oil spills.
Some 90-95% of the P&I insurance market is in the hands of insurers in the European Union and the United Kingdom, who suddenly no longer have the right to insure oil cargoes sold more $60 a barrel.
The capping mechanism “adds an extra layer of complexity to an already complicated situation”, argues Mr Baker, an effect likely to slow down Russian oil exports and “have the effect that the G7 wanted anyway”.
“Bypassing Sanctions”
However, on the market side, the cap on the price of Russian crude in itself does not change much, assures Craig Erlam, of Oanda. Urals, the main benchmark variety of Russian oil, is currently already trading below $60, rendering it the cap inoperative.
Furthermore, “Moscow is trying to circumvent the insurance ban by providing its own cover to potential customers through the state-controlled Russian National Reinsurance Company,” says Edoardo Campanella of UniCredit.
Many analysts also mention an increase in “dark tankers” or clandestine oil ships, whose ownership is unclear.
Drawing on data from the International Energy Agency (IEA), Campanella says some 100,000 barrels a day of oil shipments in September “did not include destination information”, compared to 450 000 barrels per day in October.
Interviewed by AFP, a manager of a shipping company specializing in refined petroleum products who wished to remain anonymous even defended that “there is enough shipping capacity in what we can call the ghost fleet […] so that Russia can sell its oil regardless of the price cap”.
Added to this are ships that don’t care about sanctions, with refiners willing to pay much more for transporting Russian crude, as they would still be winners compared to other varieties of crude that trade at higher prices. students.
According to the official, the shipping costs “could be somewhere between seven and ten times the normal amount”.