Isn’t This Interesting

There’s an oil tanker traffic jam at the Turkish Straits junction with the Black Sea. That jam is being caused by tanker insurers’ refusal to honor a Turkish demand that the tankers produce letters from their insurers assuring Turkey that the tankers’ Protection and Indemnity Insurance policies remain in effect following the G-7’s, EU’s, et al., imposition of a price cap on Russian oil that bars insurers from covering oil tankers carrying Russian oil for sale above the cap. The International Group of P&I Clubs provides 90%, by tonnage, of the policies covering the world’s oil tanker fleet.

That Club’s problem with that demand for proof of effectivity of its policies post-cap is this:

The insurers said they couldn’t agree to the Turkish request because it could lead them to violate sanctions….

Isn’t that rationale for the Club’s reluctance interesting. What sanctions do Club insurers think they might violate if their policies comply with the requirements of the cap? It’s certainly possible that Russian oil shippers and/or traders could lie to the insurers about the prices of their oil, but that just puts a premium on the insurers exercising due diligence before they issue their policies. And on refusing to insure further if the Russian shippers/traders are discovered after the fact to have lied.

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