Oil Price Hike Poses Challenge For Russian Marine Insurers
Alex Longley from Bloomberg wrote a blog. It's about oil. Oil is really important. But, there's too much oil. This is bad for the oil industry. But, it's good for consumers. Consumers can buy oil for cheap. The oil industry is struggling. People in the oil industry are losing their jobs. We need to find a solution. That's all from Alex Longley's blog.
Insurance industry leaders said that they are struggling to determine if they can legally insure cargo from Russia due to the increased oil prices in the country.
Buyers of Russian crude oil can only access financial services from G7 nations if the oil is sold at $60 a barrel or less. Insurers need proof that the oil was bought below the cap. This has been in place since December.
Russian oil costs more than $60 per barrel in Asia this year, which could lead to G-7 insurers breaking rules if they insure the trade. Export prices in western Russia have also been close to the $60 threshold during the month.
Insurance companies are wondering if they can trust attestations to give coverage. They're especially worried now that the US Treasury has issued a warning about avoiding the cap in Asia.
Mike Salthouse, who works at NorthStandard, said at a conference in Singapore that clubs and underwriters are in an uncomfortable position. They rely on a piece of paper, but it's hard to trust it completely.
Salthouse was in charge of sanctions committee for oil tanker insurance group. NorthStandard is a part of that group.
The insurance guy's words are very clear. He feels a lot of stress from having to put the cap into action.
During the first quarter, researchers found that many companies in G-7 countries provided transportation for oil sold above $60. This means that rules were likely broken on a large scale.
At an event, Lars Lange, from the International Union of Maritime Insurance, asked a question. He wanted to know what to do when an attestation meets the price cap but doesn't tell the full story. He said that this is a difficult situation and laws can't prepare you for it.
Insurance companies are having a tough time because prices are high. They need a document stating the oil is within the cap, but they still need to check Russian oil before shipment. On April 24th, Russian oil cost $70.99 at Kozmino port. Argus Media's prices are the basis for the G-7 cap.
Salthouse asked what customary due diligence means when sales are above the price cap. Everyone has to do it.
