Russia's Flagship Oil Above $60 Does Little to Halt G7 Services - Rigzone News

Russia's Flagship Oil Above $60 Does Little to Halt G7 Services | Rigzone

Russia's Flagship Oil Above $60 Does Little to Halt G7 Services

The price of Russia’s flagship oil may have jumped above a Group of Seven imposed cap but that has done little to impede the provision of western services for the trade.

The number of ships calling at the nation’s ports that are either western owned or insured has fallen slightly since early July — before Urals rose above $60 — but they still represent a vital part of Moscow’s petroleum supply chain.

About 40% of vessels lifting crude from Russia’s Baltic and Black Sea ports were owned by companies based in countries signed up to the cap. Before the threshold was beached, about half were western owned. A large number also still have insurance routed through London.

Though technically the price of Russian oil needs to be $60 or less in order for companies in the US, EU or G-7 to provide services such as vessels and insurance, all the firms need to do so in practice is receive a written pledge — called an attestation — that the cargo was purchased below that threshold.

The cap is working and Russian oil revenue is down almost 50% from a year earlier, said Megan Apper a spokesperson for the US Treasury.

“We are monitoring the market closely for potential violations of the price cap,” she said. “It is worth noting that trades above $60 that do not use Coalition services are not in violation of the price cap and a substantial proportion of Russian oil trades still use coalition service providers.”

Due Diligence

It’s unclear the extent to which individual owners and insurers are doing additional due diligence for the cargoes, or what the reasons are for them to continue providing their services.

However, owners and insurers have long argued that it is impossible for them to know the exact price a cargo trades at, as longer-term deals could differ from short-term market prices. There are no restrictions on service providers outside of EU and G-7 nations.

Shipowners and insurers have been seeking clarity in recent weeks as to whether only having an attestation that a cargo was purchased below $60 is sufficient, given Argus Media Ltd. has been quoting the country’s flagship Urals grade above that level since mid-July.

It stood at about $71 a barrel on Friday at Russia’s Baltic and Black Sea ports, according to Argus.

Public Complaints

Insurers have complained publicly about the risks of covering cargoes using the attestation system in recent months.

There has also been a drop off in the number of ships calling at Russian ports with industry-standard insurance from members of the International Group of P&I Clubs, which itself is based in London.

That figure has fallen from almost 60% of port calls in the weeks prior to Urals breaching the cap to about 45%. Insurers usually have standard policies that state cover is voided if a cargo or voyage is in breach of sanctions.

Bloomberg checked individual ship-ownership details using the Equasis maritime database and insurance status from data on the International Group’s website.

--With assistance from Julian Lee, Sherry Su and Christopher Condon.

What do you think? We’d love to hear from you, join the conversation on the Rigzone Energy Network.

The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.

- SINOPEC Engineering Slips but Presents Upbeat Outlook
- Equinor Weighs on Sale of Azerbaijan Assets
- North America Rig Loss Streak Continues
- Equinor Gas Project in North Sea Expected to Start Up Soon
- Norway Grants Another License for North Sea Carbon Storage
- Russia's Flagship Oil Above $60 Does Little to Halt G7 Services
- Nostrum OKs Limited Drilling Program for Kazakhstan Field
- Woodside Posts 27 Percent Higher Revenue for First Half
- Gulf of Mexico Disturbance Turns into Tropical Storm Harold

- BofA Global Research Reveals Latest Oil Price Forecasts
- Saudis Have No Good Reason to Drive Oil Up to $100
- Argentina Fixes Oil Price at $56 a Barrel to Put Inflation in Check
- Are Oil and Gas Tankers in the Black Sea Safe?
- USA Crude Oil Stocks Down 6MM Barrels Week on Week
- Carlyle to Sell Assala Energy in Gabon to M&P for $730MM
- Macquarie Strategists Short Term Bullish but Issue Warning
- UK Gov Funds Green AI Innovations
- USA Hurricane Center Tracking 5 Atlantic Disturbances
- BOEM Identifies 2 Wind Energy Areas Offshore Oregon

- BofA Global Research Reveals Latest Oil Price Forecasts
- What Would Happen to Russia's Oil and Gas Industry if the Government Fell?
- Which USA States Consume and Produce the Most Energy?
- Oil Prices Mount Significant Break to Upside
- Conventional Discovered Oil and Gas Volumes Falling to New Lows
- BMI Reveals Latest Brent Oil Price Forecasts
- USA EIA Boosts Brent Oil Price Forecasts
- NOAA Updates 2023 Atlantic Hurricane Season Prediction
- Invictus Completes Seismic Survey for Zimbabwe Project
- Harold Hamm Sees a Great Oil Fortune Still Untapped in USA Shale