The energy war between Russia and the West threatens to create a struggle in which the West seeks to cap the price of Russian oil and the Kremlin cuts off the supply of gas to Europe, according to a report in the Guardian, which says the aim is to introduce the cap as early as December.
According to the newspaper, senior US officials came to London to talk to the Treasury about how the idea would work. It says: “London, the centre of the shipping insurance industry, is indispensable to the plan. In essence, it requires shipping underwriters not to provide insurance to any tanker that is planning to sell the oil above a price cap set by the G7.
An audacious piece of market intervention, the plan retains many inherent flaws. Underwriters claim they do not know the price of the oil that the ship they have insured will sell. For the scheme to work, it may require neutral oil importing countries, such as India to participate, or else Russia will simply find new markets for its oil. The Greek shipping industry in particular would be hit.”
London market insurance industry insiders are reportedly “not enthusiastic.”
Eric Mamer, the European Commission’s chief spokesperson, said: “Gazprom’s announcement this afternoon once again shutting down Nord Stream 1 under fallacious pretences is another confrontation of its unreliability as a supplier.”
Underwriters profess to not having data insights on the sale price of the oil carried on ships, so is there really no data out there? Although it is possible to estimate the value of oil carried, getting the price of oil sold is, admittedly, difficult. Some data analysts have commodities on sea which is an estimate of values on tankers that traders use to buy and sell. It is the latter that is needed here, and that could indeed prove to be a challenge.