The price cap on Russian oil is becoming increasingly unenforceable, says Mutual Insurance Club

By bne IntelliNews May 5, 2024

The price cap on Russian oil is becoming increasingly unenforceable, said the International Group of P&I Clubs, or so-called Mutual Insurance Clubs, according to reports on May 3.

About 800 oil tankers, which were previously managed by member organisations of the International Group of P&I Clubs, have moved to the so-called shadow fleet, according to a written submission by the club in response to the British government's inquiry about the effectiveness of sanctions against Russia. Additionally, insurers are unable to verify whether traders are adhering to the price limits.

This policy seems increasingly unenforceable as more ships and related services become involved in this parallel trade, the International Group stated.

In April, only 16% of all Russian cargoes were transported by members of the International Group, which is the lowest rate at least since the beginning of 2023, according to transportation data collected by Bloomberg.

Also, that International Group mentioned that it's necessary to give a warning to India and China to ensure their purchases comply with the G7 requirements.

The comment comes as Russia’s oil revenues are rising, up 79% in the first three months of this year, according to figures released by Russia’s Ministry of Finance (MinFin) in April.

Russian oil export revenues surged to $17.2bn in March 2024, driven by higher global oil prices and increased crude export volumes, according to the April ‘Russian Oil Tracker’ by KSE Institute, which is calling for the oil sanctions regime on Russia to be tightened. As reported by bne IntelliNews, the oil sanctions are a spent cannon and have largely failed starve the Kremlin of the funds it needs to run its war in Ukraine.

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