Oil, Sanctions, and Strategy: India’s Secret Weapon-Russian Insurers

Image Source: The Economic Times

In a daring action aimed at revolutionizing the passage of Russian oil to India, the Indian government has paved the way for three large Russian reinsurers-Sberbank Insurance, Ugoria Insurance Group, and ASTK Insurance Company-to offer marine insurance cover for shipments of Russian oil. This development comes in the wake of sharpening Western sanctions and heightened watchfulness over the logistics of Russian oil, safeguarding India's energy security in a strong and unbroken fashion.

Key Highlights:

Strategic Approval: India's shipping ministry is in the process of accrediting Sberbank Insurance, Ugoria, and ASTK to provide protection and indemnity (P&I) coverage to Russian oil tankers arriving at Indian ports. This will take the number of accredited Russian insurers to eight, from five previously this year.
Sanctions Bypass: The action allows Russian oil sellers to circumvent Western insurance restrictions, since none of the Russian companies belong to the International Group of P&I Clubs that controls global tanker liability coverage. India only complies with UN sanctions, but not unilateral US or EU actions, so it can sanction even US-sanctioned Sberbank Insurance.
Energy Security: Russia has been India's leading oil supplier for the third straight year as imports are predicted to reach a record 2.15 million barrels per day in April-an all-time high after sanctions were lifted. Discounted Russian crude is enjoyed by Indian refiners with insurance coverage and ships covered by sellers.
Operational Impact: The new insurance options will secure supply chains, particularly following recent interruptions due to paperwork hiccups and sanctions. It also marks India's pragmatic balancing act between global pressures and local energy requirements.

This insurance gateway marks India's commitment to getting cheap energy while navigating the intricate geopolitics of the world.

Sources: Reuters, Bloomberg, Economic Times