Oil price cap ‘increasingly unenforceable’ insurers warn

Written evidence submitted to the UK parliament by the International Group of P&I Clubs has warned that the oil price cap, introduced 16 months to go in a bid to cut Russian revenues, is not working. 

British politicians have been holding an inquiry to look at how sanctions against Russia are working. The International Group, made up of 12 P&I clubs that cover more than 85% of world tonnage, has warned that more than 800 tankers have departed from their books since the cap came in, with the rule’s attestation scheme coming in for particular criticism.

The cap allows traders, shipowners, charterers, and financial services providers to engage in the sale, purchase and carriage of Russian oil and oil products by sea, provided the sale price of Russian oil or oil products are sold at or below the price stipulated by the G7 and its coalition of states. 

Evidence of the sale price of such products is dependent on a process of attestations that must be provided initially by the oil products trader. 

“These attestations may or may not provide accurate price information thereby exposing shipowners and insurers to allegations that they have breached the rules,” the International Group argued, adding: “The attestation is a flawed regime which potentially exposes both the P&I Club and a shipowner, operator, charterer to a breach of the [cap].”

The insurers warned that the price cap “appears increasingly unenforceable” as more ships and associated services move into the shadow fleet.