According to a report by Bloomberg, Western-insured tankers are continuing to load and export Russian oil, despite the price of Urals grade crude exceeding the $60 per barrel cap set by the G7 countries and the European Union (EU). It is estimated that about 40% of vessels carrying Russian oil from Baltic and Black Sea ports are either owned or insured by companies based in countries that have signed up to the price cap.
As of Friday, Urals crude was trading at about $71 per barrel at Russian ports, as reported by Argus Media. Prior to the breach of the price limit, approximately 50% of tankers loading Russian oil were Western-owned. Many of these vessels also had insurance routed through London.
The $60 per barrel price cap for Russian seaborne oil exports was implemented on December 5, and it prohibits Western companies from providing insurance and other services to shipments of Russian oil unless the cargo is purchased at or below the set price.
However, the report states that even though the price of Russian oil technically needs to be $60 or less for US, EU, and G7 companies to provide services such as vessels and insurance, in practice, all these firms need is a written pledge, called an attestation, stating that the cargo was purchased below the threshold.
The US Treasury spokesperson, Megan Apper, stated that they are closely monitoring the market for potential violations of the price cap. She pointed out that trades above $60 that do not use coalition services are not in violation of the price cap, and a significant proportion of Russian oil trades still use coalition service providers.
Tanker owners and insurance companies have argued that they cannot determine the exact price at which a crude cargo is traded, as longer-term deals could differ from short-term market prices.
This breach of the price cap is not the first time. In mid-July, Russia’s Urals crude exceeded the price limit for the first time since its implementation.
It remains to be seen how the US, EU, and other Western nations will respond to these ongoing violations of the price cap. Companies involved in the shipment of Russian oil will have to navigate the complexities of international regulations and market dynamics to ensure compliance.
As the situation unfolds, it will be interesting to see if any further measures are taken to enforce the price cap and how it will impact the global oil market and the economies of the parties involved.
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