The sanctions regime against Russia, which has effectively seen the Western marine (re)insurance market no longer insuring international oil and gas shipments, has been under the spotlight for some time now. Not because anyone objects to the regime on moral grounds, but really because, in the eyes of the market, it simply isn’t working and too many rogue players are simply circumnavigating it.
The biggest flag was raised this summer when a leading voice in Lloyd’s of London’s marine insurance market called for a “Plan B” on western sanctions levelled against Russia over its war in Ukraine, amid rising concerns over unintended consequences for the global shipping sector.
Neil Roberts, head of marine & aviation at the Lloyd’s Market Association, highlighted a “growing grey fleet that operates beyond the dollar and dilutes western efforts”. Separately, S&P Global Market Intelligence has estimated more than 400 tankers operate within the shadow fleet, with estimates of the wider group of vessels at risk of breaching sanctions ranging into the thousands.
Now the coup in Gabon in put the issue centre stage once gain. Why? Because, according to S&P, the Gabon flag has dramatically increased the number of tanker vessels under its registration in April and May 2023, with these flag changes having
98% of the Gabon flagged tanker fleet greater than 10,000 DWT either subject to Russian shipping sanctions or has an unknown beneficial group owner.
Russia has officially made known its concerns over the coup, which is interesting given that Gabon is a small oil-exporting country with ties to France. Why the sudden concern? Could it be because Russian oil and gas exports have become inextricably linked to this West African state?
Time to revisit the whole sanctions regime again? I think so. Surely the marine market can come to a more nuanced solution, and one which avoids placing insurance either in the hands of non-Western carriers, or simply having a dark fleet with no insurance at all?
Editor, Emerging Risks