Russian oil "deals a heavy blow" to Western efforts, EU is thinking of ways

In October, there were “virtually no” Russian seaborne oil shipments below the $60-a-barrel price ceiling that the West is trying to impose, a senior European government official said.

EU officials hold discussions on strengthening the effectiveness of the Russian oil price cap. (Source: Reuters)

Nearly three-quarters of all Russian seaborne crude was shipped without Western insurance in August, according to data obtained by the Financial Times – a key sign that the price cap is being breached.

In October, only 37 of Moscow's 134 oil tankers had Western insurance, and officials say the number of vessels operating in compliance under the current cap is likely to be much lower.

European officials are concerned that some insurers have received false declarations from Russian oil companies or traders, requiring them to provide written guarantees that crude oil would cost less than $60 a barrel.

In recent days, EU officials have held discussions on how to strengthen the restrictions, including options for strengthening enforcement or restricting Russia's access to the used tanker market.

Western concerns were further heightened when official Russian statistics showed that the average oil price was above $80 per barrel.

Moscow's soaring oil export prices have dealt a blow to efforts by the Group of Seven (G7) leading industrialized nations to curb capital flows to the Kremlin.

G7 members and Australia introduced crude price caps in December to squeeze Russian budget revenues. They also cut off access to Western services such as shipping and insurance unless traders adhere to the $60-a-barrel limit.

While these measures have had some initial success, Russia appears to have found ways around them, including building a “shadow fleet” of old tankers to avoid Western markets.

Source