Indian regulators have approved the activities of Russian insurance companies working with oil suppliers. This further weakens Western sanctions that were intended to limit Moscow’s revenue, thereby reducing its ability to finance the war in Ukraine.
The system for limiting the price at which Russian oil is sold abroad is based on carriers’ access to Western financial services, primarily tanker insurance. With the help of the shadow fleet, Russia has already learned to largely bypass the oil price ceiling set since December 2022 by the G7 countries and the EU. However, some tankers involved in the trade of Russian oil and petroleum products continue to use Western insurance.
Since last fall, the United States began to impose sanctions against tankers and the companies that own them that violate the ceiling, including by defrauding insurers. This led to Indian refineries practically stopping accepting Russian oil for a couple of months this year. In particular, they completely refused to work with the sanctioned Sovcomflot.
Now, the General Directorate of Shipping of India has issued permission to companies such as VSK, Sogaz and Alfa-Insurance to operate in the field of marine insurance until February 20, 2025, Bloomberg reports with reference to the department’s website. And the permission of Ingosstrakh was extended until March 2029.
All four companies are being backed by the Russian National Reinsurance Company, according to three people familiar with the situation.
Less than a quarter of maritime cargo shipped from Russia to all destinations in March was insured by members of the London-based International Group of Shipowners’ Liability Insurance Clubs, which insures about 90% of all shipping in the world. The use of Russian insurers to support oil trading will help further reduce Russia’s dependence on Western financial companies, while meeting the requirements of Indian buyers.
Other ways to circumvent the restrictions include registering more and more companies and transferring tankers working with Russian oil to them. Thus, in January–February, large volumes were transported to private and public Indian refineries by three previously unknown companies – Blackford, Black Pearl and Vertex. Many of these companies have been around for less than a year, says Victor Katona, lead crude oil market analyst at Kpler.
