Shipping data evaluated: Russia is getting around the oil price cap more and more successfully

Shipping data evaluated
Russia is getting around the oil price cap more and more successfully

By Christina Lohner

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To reduce Russia’s oil revenues, the West requires its shipping companies and insurers to ship Russian oil for a maximum of $60 a barrel. Russia still sells its oil at higher prices.

Given the current rise in oil prices, Russia’s oil exports are likely to bring additional revenue into Russia’s war chest. The price cap for Russian oil introduced by Western states does not work – Russia circumvents Western sanctions for the majority of its oil exports.

The G7, EU and Australia agreed last year that no more than $60 per barrel should be paid for Russian oil. To achieve this, shipping companies and insurance companies – whose markets are dominated by industrialized countries – are no longer allowed to transport more expensive Russian oil. But a current evaluation of shipping and insurance data by the “Financial Times” shows that in August almost three quarters of Russian crude oil shipments were carried out by ship without Western insurance. According to information from insurers and the analysis company Kpler, it was half that in the spring. Moscow is apparently getting around the price cap more and more cleverly.

The Kyiv School of Economics estimates that Russia will see rising oil prices this year, also due to rising world market prices An additional $17 billion in export revenue will bring in, even 33 billion next year. According to research by the institute, Russian oil was recently sold for more than $70 per barrel in the country’s most important export ports. The Kiev economists accuse Western governments of failing to enforce sanctions, i.e. a lack of control.

Experts are calling for tougher sanctions

It’s not that the West’s sanctions don’t work at all, as the International Working Group on Russian Sanctions at Stanford University said in a statement current analysis explained. Ukraine’s allies hardly buy any Russian oil anymore, and Russia can only sell its oil to other countries at a discount. The group of independent, international experts advocating for the most efficient sanctions against Russia estimates that the country has lost between $140 billion and $170 billion in oil and gas revenue since the start of the war. This year, the aggressor lost half of its budget revenue from the oil and gas sector – after record export revenue of $350 billion from the sector last year.

But Russia is recouping some of the losses with the help of a shadow fleet of old, decommissioned oil tankers that operates without Western insurance and other services. At the beginning of the year, the number of these ships owned by offshore companies that were difficult to trace was estimated at 600. According to media research, some tankers falsify their position data in order to continue to receive Western insurance coverage. The fact that the volume of Western-insured oil exports from Russia has fallen so sharply is probably partly due to a certain reluctance on the part of insurers and shipping companies due to the sanctions.

In order to prevent Russia from circumventing the price cap even further, the International Working Group on Russian Sanctions is proposing the creation of a so-called white list: only selected traders should be allowed to issue price certificates for Russian oil cargoes. The experts also want to slow down the Russian shadow fleet by requiring all tankers that pass through ecologically sensitive EU territorial waters to provide evidence of appropriate oil spill insurance.

The group expects the greatest success to come from lowering the oil price cap – to just $30 per barrel. However, the less Russian oil reaches the West’s price limit, the less severely a halving would hit the aggressor.

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