Russia is shipping crude oil to India under the price cap mechanism on tankers insured by Western companies, in an early sign that Russia is not cutting off crude supply that complies with the G7 price cap of $60 per barrel, the Financial Times reported on Friday, citing its own analysis of insurance and shipping data.
The price cap on Russian crude imposed by the EU, the G7, and Australia came into effect on December 5. Under it, buyers paying $60 or less per barrel of Russia’s crude will have full access to all EU and G7 insurance and financing services associated with transporting Russian crude to non-EU countries.
Russia has vowed to ban the sale of Russian crude oil to buyers part of the Price Cap Coalition or if the purchase is limited by the G7/EU price cap, as a measure to counter the $60 a barrel price ceiling set by the West.
However, according to FT’s analysis on cargo data from Kpler, at least seven tankers have been loaded with Russian crude oil since December 5, and those vessels are insured by western companies. The tankers are carrying 5 million barrels of crude from Russia’s Baltic ports en route to Indian refineries, according to FT.
Essential, the operator of one of the tankers, Ruby Phoenix, told FT “We have from our counterparts the necessary attestation that the cargo in question complies with the price cap regulations.”
The first sign that Russia isn’t backing off sales per the price cap regulations means that Indian refiners are careful and continue to prefer West-insured tankers to ship cheap Russian crude. On the other hand, these cargo sales to India signal that despite pledges to ban sales under the price cap mechanism, Russia has complied with it at least in some trades, as the logistics of an entirely ‘dark fleet’ may have not panned out the way Moscow has hoped.
By Tsvetana Paraskova for Oilprice.com
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