UK imposes sanctions on Russian insurer protecting ‘shadow fleet’ of tankers

Financial Times

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The UK has imposed sanctions on Russian insurer Ingosstrakh, a key player in the operation of the Kremlin’s “shadow fleet” of oil tankers, as part of a push to tighten measures designed to restrict Moscow’s energy revenues.

Ingosstrakh, a large Russian insurer, has become a significant provider of insurance for vessels in the so-called shadow fleet — the 100 or so mostly ageing tankers Moscow has acquired to transport and sell its oil for more than the $60-a-barrel limit western powers have attempted to impose.

The price cap is intended to allow Russia to keep exporting oil so as to avoid global price spikes that would harm western economies, while squeezing the Kremlin’s revenues. Insurers have been an important lever for enforcing the policy as ships can be required to show adequate insurance, when entering ports in particular.

The FT reported in March alongside Denmark’s Danwatch that Ingosstrakh was insuring shadow fleet vessels, but that the insurance it was providing could be voided if the shipments were breaching the cap. This could potentially saddle coastal states with huge clean-up bills in the event of an oil spill.

Craig Kennedy, an expert on Russian energy based at Harvard, said: “Sanctioning insurers which help the shadow fleet is a way to make it harder for these vessels to operate. But the most important thing for all the G7 countries is to target ships, by name, which we know are part of this evasion network.”

In recent months, ships targeted by US sanctions appear to have become harder for Russia to use to move its oil.

The UK’s sanctions, which restrict dealings with the targeted entities, have also directly designated a number of shadow fleet vessels for the first time. One of them, the 19-year-old Canis Power, broke down last year in the Danish straits in an event that was seen as a warning about the dangers in Russia’s systematic use of old tankers.

These sanctions are the first use of new sanctioning powers passed by the British parliament at the end of May during the legislative “wash-up” in days after the UK called its general election. The new powers allow Britain to target ships with sanctions that “obtain a benefit from or support the government of Russia” or have undermined Ukrainian integrity.

Kennedy said: “The next step should be that we should

The full article is available here. This article was published at FT Markets.