Commodities
Exclusive-Western insurers provide cover for Russian oil despite price cap concerns
By Jonathan Saul and Gleb Stolyarov
LONDON (Reuters) – A group of Western insurers have provided cover for tankers carrying Russian crude, keeping its oil flowing after many in the trade sector withdrew for fear of breaching the rules of a G7 price cap, data from traders and shippers shows.
The data seen by Reuters showed that five insurers, including American Club, Luxembourg-headquartered West of England and Norway’s Gard, provided cover for 10 tankers that sailed from Russia to Asia this year.
American Club and West of England provided insurance for two vessels – the Gioiosa and the Orion I – that made similar voyages in early 2024.
Both vessels took on board crude from the state-owned Russian oil company Rosneft in Russia’s Baltic and sailed to China, the data showed.
American Club said the ship, which flew the Panama flag, was on its cover list. West did not comment on specific tankers.
Norway’s Gard, which data showed covered a separate vessel, also declined to comment on specific ships.
The three non-profit mutuals, who insure ships against oil pollution, injury and loss of life, say they are providing a service to their members.
The extent of the ongoing provision by Western insurers in covering specific Russian oil deals has not been previously reported since the cap was imposed in 2022 following the war in Ukraine.
The cap, imposed by the Group of Seven industrialised nations and their allies to curb Moscow’s ability to finance the war, only allows Western insurers and ships to participate in Russian oil trade if the oil is sold below $60 a barrel.
Many of those who stopped trading such cargoes said they were doing so because they could not be certain about the price of the oil carried by the ships they were insuring.
Russia, which has banned its firms from complying with the price cap, sold its flagship Urals crude at Baltic ports for an average of $69.4 per barrel so far this year, well above the price cap, LSEG data shows.
Insurers and ship owners are not expected to investigate the price.
Instead, Western enforcement agencies including the U.S. Treasury require insurance companies to request so-called attestations from the parties that buy and sell the crude that the oil changed hands below the price cap.
‘FLAWED’ PROCESS
The International Group (IG) of P&I Clubs – which provides insurance for 90% of the world’s fleet – said in April the attestation process was flawed and risked exposing its members to breaches of the price cap.
The IG did not respond to a request for comment on the risks for this story.
The insurers identified by Reuters said separately they rely on the attestation letters from the participants in the trade that all work was legal and complied with Western sanctions.
Reuters could not contact any of the parties as they were not named due to commercial confidentiality.
IG member American Club said it did not have direct access to price information when providing cover for the Gioiosa tanker.
Gard said it relied on price cap attestation and was also checking additional sources of data and information. Both companies referred further questions on the cap to the IG.
The other insurance providers for Russian oil included Maritime Mutual from New Zealand and IG member London P&I Club, Reuters research based on the shipping and trading data showed.
Maritime Mutual and London P&I did not respond to a request for comment on the potential risks.
However, Maritime Mutual, which is not part of the IG group, provided Reuters with a copy of its Russian oil insurance policy and a blank copy of an attestation letter which states that coverage will be withdrawn if a shipment violates the price cap.
The letter asks a company seeking cover – usually a charterer or a shipper – to tell its insurer the name of the vessel, its port and date of loading and discharge.
It asks the charterer to attest the shipment is in compliance with the price cap but does not require inclusion of the price paid anywhere in the attestation.
West also told Reuters the price cap regime treats ship owners and insurers as indirect participants of the transactions, known as tier three, hence they are not obliged to verify prices.
“The charterer/trader will never give away that (price) information and give away their margins,” Tony Paulson, West’s head of Asia and corporate director, told a Lloyd’s List podcast last month.
Gard, West P&I, American Club said they would end the cover if information emerged that the attestation was inaccurate and the price was above the cap.
MOSCOW (Reuters) – Nearly 500,000 metric tons of Russian oil products are trapped on tankers hit by U.S. sanctions, LSEG data showed on Wednesday.
On Jan. 10, new Russia-related sanctions targeted more than 180 vessels and insurance companies, adding to the impact of similar restrictions imposed by United Kingdom (TADAWUL:) and Europe Union.
The vessels under the latest U.S. sanctions include nine tankers that loaded oil products at Russian Baltic and Black Sea ports in December and January.
Four of them – Cup, Aquatica, Turaco and Onyx – are carrying in total around 280,000 tons of fuel oil, destined for India, Turkey and Singapore, LSEG data shows.
Another of the tankers – Ariadne – was loaded in December with about 35,000 tons of naphtha in the Russian Baltic port of Ust-Luga. It is drifting near Egyptian port of Port Said, according to shipping data.
Four other vessels from the sanctions list are carrying in total around 160,000 tons of ultra-low sulphur diesel and gasoil of Russian origin.
One of those cargoes – Pravasi – is discharging at the Brazilian port of Santos. Three other vessels – Symphony, Jupiter and Talisman – are on their way to Turkey, according to LSEG data.
Although there is a transition period, allowing the discharge of cargoes that has already been agreed, traders said concern about penalties has slowed activity.
Since the sanctions were announced, at least 65 oil tankers have dropped anchor at multiple locations, including off the coasts of China and Russia, ship tracking data showed.
By Arunima Kumar
(Reuters) -Oil prices paused their rally on Tuesday, but remained near four-month highs, with the market’s attention focused on the impact of new U.S. sanctions on Russian oil exports to key buyers India and China.
futures slipped 54 cents, or 0.67%, to $80.47 a barrel by 1033 GMT, while U.S. West Texas Intermediate (WTI) crude fell 53 cents, or 0.67% to $78.29 a barrel.
Prices jumped 2% on Monday after the U.S. Treasury Department on Friday imposed sanctions on Gazprom (MCX:) Neft and Surgutneftegas as well as 183 vessels that transport oil as part of Russia’s so-called “shadow fleet” of tankers.
“With several nations seeking alternative fuel supplies in order to adapt to the sanctions, there may be more advances in store, even if prices correct a bit lower should tomorrow’s U.S. CPI data come in somewhat hotter-than-expected”, said Charalampos Pissouros, senior investment analyst at brokerage XM.
The U.S. producer price index (PPI) will be released today, followed by the consumer price index (CPI) on Wednesday.
A core inflation rise above the 0.2% forecast could lower the likelihood of further Federal Reserve rate cuts, which typically support economic growth and could boost oil demand. [MKTS/GLOB]
While analysts were still expecting a significant price impact on Russian oil supplies from the fresh sanctions, their effect on the physical market could be less pronounced than what the affected volumes might suggest.
ING analysts estimated the new sanctions had the potential to erase the entire 700,000 barrel-per-day surplus they had forecast for this year, but said the real impact could be lower.
“The actual reduction in flows will likely be less, as Russia and buyers find ways around these sanctions,” they said in a note.
Nevertheless, analysts expect less of an supply overhang in the market as a result.
“We anticipate that the latest round of sanctions are more likely to move the market closer to balance this year, with less pressure on demand growth to achieve this,” said Panmure Liberum analyst Ashley Kelty.
Uncertainty about demand from major buyer China could blunt the impact of the tighter supply. China’s imports fell in 2024 for the first time in two decades outside of the COVID-19 pandemic, official data showed on Monday.
By Arathy Somasekhar
HOUSTON (Reuters) – Peru’s niche Bretaña is gaining popularity in the United States, with the first cargo discharging in the U.S. Gulf Coast this month as U.S. refiners seek alternatives for declining Mexican heavy crude.
Bretaña, a rare heavy sweet crude with minimal metals, is produced in the Peruvian side of the Amazon (NASDAQ:) rainforest. It is then barged along the Amazon river and loaded onto larger ships that depart from Brazil.
The vessel Radiant Pride transported about 300,000 barrels of Bretaña from Manaus, on the banks of the Negro river in Brazil, and discharged on Jan. 2 in Houston, ship tracking data from Kpler and LSEG showed.
The cargo was bought by oil major Shell (LON:), a source said. Shell declined to comment.
“Given the drop in heavy sour crude from Mexico to the U.S. Gulf Coast over the last year, we are starting to see new heavy grades being pulled in to backfill this loss – this is a trend we only expect to continue,” said Matt Smith, an analyst at Kpler.
U.S. imports from Mexico fell to their lowest on record in 2024 as the Latin American country’s oil production fell and a larger portion of output remained at home to be refined.
Two cargoes of Peru’s Bretaña, a relatively new entrant into the market since production began in 2018, discharged at the U.S. West Coast last year – one at Marathon Petroleum (NYSE:) and another at PBF Energy (NYSE:) terminals, the Kpler data showed.
Marathon Petroleum declined to comment. PBF Energy did not immediately reply to a request for comment.
PetroTal Corp, the producer of Block 95 where the Bretaña oilfield is located, bought the assets from Canadian producer Gran Tierra Energy (NYSE:) in 2017, and currently produces about 20,000 barrels of oil per day, according to Chief Executive Officer Manuel Zúñiga.
Challenges with transporting the crude via a pipeline operated by Peru’s state oil firm Petroperu led to a brief halt in exports between 2022 and 2024, Zúñiga said.
Petroperu has struggled in recent years to keep the line operational amid spills and social conflict interrupting its flow.
Three cargoes of Bretaña headed to the U.S. West Coast and one to the U.S. East Coast between 2020 and 2022, Kpler data showed.
About 90% of the Bretaña crude produced by PetroTal is exported, and the remaining is transported by barges to Petroperu’s refinery in Iquitos, Zúñiga said.
PetroTal has a contract with Houston-based Novum Energy under which Novum buys the crude for export and arranges its transportation, Zúñiga added.
Novum did not immediately respond to a request for comment.
While PetroTal hopes to increase production, permitting delays as well as reliance on barges are a current limitation, Zúñiga said.
“You need access to the pipeline,” Zúñiga said, adding that the company is working to secure use of the infrastructure.
Petroperu said last year that it would hold negotiations with producers in the Peruvian jungle so that they can use the pipeline with a fair rate to help cover operational costs.
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