Russian oil price cap
A mechanism adopted by the G7 and the EU in 2022 that allows insurance and shipping of Russian oil only if it is sold below a price ceiling, turning the marine insurer into an enforcement agent of sanctions.
The Russian oil price cap is an original construction: instead of banning trade, it prohibits Western service providers, carriers, brokers, financiers and above all insurers, from providing their services for a cargo of Russian oil sold above a set price. It has applied to seaborne crude since December 5, 2022, at an initial price of sixty dollars a barrel, and to refined products since February 5, 2023. The instrument chosen was insurance, because the protection and indemnity clubs of the International Group insured most of the world's tanker fleet. Each link must obtain an attestation that the price respects the cap, which shifts onto the underwriter a commercial check it has no means of performing itself. The mechanism had an effect its authors foresaw without being able to prevent: part of the trade migrated to a fleet of aging vessels without Western insurance, whose possible accidents expose coastal states to pollution with no solvent insurer to pay for it.
In July 2025, the European Union lowered the cap applicable to Russian crude to 47.60 dollars a barrel from September 3, 2025, and introduced an automatic review to keep it below the average market price. An insurer covering a cargo must therefore check a sale price that appears nowhere in the contract it underwrites.
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