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Researchers have identified eight shipments of Russian crude that were covered by UK insurers despite allegedly being sold above the US$60 price cap, as authorities pledge to crack down on sanctions circumvention by rogue oil traders. 

The claims follow an investigation by the Centre for Research on Energy and Clean Air (CREA), a non-profit organisation headquartered in Finland, into 47 shipments of Urals crude oil that left the port of Novorossiysk between October and December 2023. 

CREA says each of those cargoes appears to have been priced at more than US$60 per barrel, yet 26 were carried on tankers owned or insured by companies in countries that have imposed a price cap on such trades. 

Of those, it says eight were covered by UK Protection & Indemnity (P&I) insurance, which together generated £206mn in revenue for the Kremlin – around £43mn more than if the price cap regime had been observed. 

Four of the shipments were insured by the West of England P&I Club, two by NorthStandard, and one each by Britannia P&I Club and the London P&I Club, the investigation says. 

It calls on sanctions authorities to investigate whether UK insurers are carrying out sufficient due diligence on Russian oil trades, and to strengthen the process for providing evidence that the cap is being adhered to. 

When contacted by GTR, a spokesperson for the West of England P&I Club says that as “tier three” entities under the sanctions regime, insurers and shipowners have “no access whatsoever to information relating to the purchase price of any particular cargo”. 

“The price cap mechanism allows tier three actors to rely on attestations that the cargo being carried was purchased at below cap prices,” they say. 

“If it transpires that an attestation is inaccurate or there is any other sanctionable activity then insurance cover for the voyage concerned ceases automatically and in its entirety. 

“It would therefore be incorrect to suggest that West provides cover for any tanker carrying above cap price cargoes; that is not the case and there is no cover whatsoever for any such activities. West does not provide cover for sanctionable activity.” 

The spokesperson adds that West is a not-for-profit mutual insurance association with no financial motive for supporting illicit Russian trade, and that it has robust sanctions compliance policies in place. 

Mike Salthouse, head of external affairs at NorthStandard, tells GTR it “only provides cover for lawful trades carried out in strict accordance” with the oil price cap regime. 

“Under the oil price scheme a shipowner must conduct customary due diligence and provide a valid attestation for there to be cover for the carriage of Russian oil,” he says. 

“The [scheme] seeks to achieve a mechanism for the lawful carriage of Russian oil whilst respecting the fact that shipowners and their insurers and banks have no direct access to the price paid for the cargo.” 

Brittania P&I Club and the London P&I Club did not comment when contacted. 

CREA’s investigation acknowledges that maritime insurers do not have direct access to price information for the cargoes they cover. 

“The current oil price cap policy therefore relies on attestation documents provided by oil traders to glean information about the price paid for Russian oil,” it says. 

But it says insurers “must undertake the required due diligence to ensure that the seaborne oil they are providing maritime insurance for has been paid below the oil price cap”. 

Sanctions authorities and experts have long warned insurers, banks and shipping companies that some traders carrying Russian oil have been making attestations that do not reflect the real price of cargoes. 

CREA adds that Russian crude is often traded “by opaque entities located outside price cap coalition countries, such as the United Arab Emirates and Hong Kong”. 

“Traders in non-sanctioning countries are able to fraudulently under-report the price they paid to avail of Western maritime insurance to transport Russian oil,” it says. “In reality, as seen in customs data, the oil is often traded above the price cap.” 

Research by the Peterson Institute for International Economics, published in July last year, estimated that at least 24 million barrels of Russian oil priced above US$60 per barrel were transported on vessels covered by the regime in the first quarter of 2023. 

The CREA investigation coincides with a communique issued by the G7 group of world leaders on June 14, following a summit in Italy, which promises to “tighten compliance and enforcement” around the price cap regime – a source of sustained criticism from investigators and campaigners. 

“We will impose additional sanctions measures on those engaged in deceptive practices while transporting Russian oil and against the networks Russia has developed to extract additional revenue from price cap violations or from oil sales using alternative service providers,” it says.