Hunting for tankers – Kommersant

Attempts by the US authorities to stop the erosion of the Russian oil price ceiling have resulted in concrete results. U.S.-registered mutual insurance club American Club has withdrawn oil spill insurance for 34 Gatik Ship Management tankers, according to Bloomberg. This company is registered in Mumbai and emerged as one of the world’s largest oil tanker operators only in 2022, after the imposition of sanctions against Russia, having bought 53 relatively old vessels from the market in less than a year (with an average age of 17 years). All of these vessels, capable of carrying more than 30 million barrels in total, were actively involved in the Russian oil trade, according to S&P Global. According to Bloomberg sources, the withdrawal of insurance was due to the fact that Gatik was going to transport Russian oil at a price above the ceiling. At the same time, back in March, the head of the American Club, Daniel Tadros, told Bloomberg that insurers received a notification from Gatik that the oil being transported was purchased in compliance with the sanctions.

Ceiling violations are not new in and of themselves, but in April, their scope could have increased sharply due to the increase in Brent oil prices. As a result, not only Russian ESPO oil, but also part of the Urals batches began to be sold above the ceiling of $60 per barrel. The US Treasury in mid-April urged US companies to keep a close eye on attempts to circumvent the price ceiling (see “Kommersant” dated April 18).

The withdrawal of insurance coverage is probably the strongest tool that the Western countries still have to interfere in the Russian oil trade. More than 90% of the marine insurance market is in the EU, UK and US, and since the damage from oil spills can reach huge sums, it is not so easy to find alternative insurers and reinsurers of such risks in friendly countries.

For Gatik, the lack of insurance means that tankers will not be able to enter any major port, as well as pass through the Black Sea straits. Perhaps the company will try to find an insurer in Russia, India or the UAE. But, as my interlocutors say, another scenario is more likely. Since Gatik does not own, but only manages the tankers (it is not known who owns them), it may be easier to create a new legal entity, transfer the tankers and crew to it, starting the business from scratch. Generous payments to some European insurer will allow him to turn a blind eye to the history of these tankers and not be too picky about assurances that the oil transported was bought within the ceiling. Of course, at some point, questions may arise and the scheme will have to be repeated, but the freight rates for Russian oil, which have increased fivefold since the beginning of the conflict, will cover these costs.