Europe is making it much harder for Russia to ship oil anywhere

But a smaller part of the latest sanctions package could prove just as significant. A ban on insuring ships carrying Russian oil would make it harder for Moscow to divert hundreds of thousands of barrels a day to But an uptick in exports to Asia helped make up for a large chunk of those losses. China and India — taking advantage of huge price discounts — imported about 938,700 barrels per day in May, per Kpler data. In January, imports from those two countries totaled just 170,800 barrels per day.”Fast forward three months after the start of the war, and Russian crude exports are still continuing apace,” Smith said. “They’re just being rerouted and finding new homes.”The EU ban on insuring the transport of Russian crude is aimed squarely at this problem. If the United Kingdom cooperates, it would make it much harder for India to pick up the slack. The same goes for China, where demand for fuel is expected to increase as coronavirus restrictions in major cities are eased.The insurance market also includes a network of reinsurers who help pool risk. Many of these firms are based in Europe.”Initially, at least, I think this is going to have a huge impact on the market,” said Leigh Hansson, a partner in the global regulatory enforcement group at the law firm Reed Smith.Shutting Russia out of other markets would have the desired effect of tightening the screw on Moscow, but it could further boost global energy prices just as Europe and the United States try to tame soaring inflation.”Yes, Russia will suffer a loss of revenues, but Europe and the United States will likely suffer from a substantial increase in world oil prices,” Olivier Blanchard, former chief economist at the International Monetary Fund, wrote last week in an article for the Peterson Institute for International Economics.Insurance as a weaponRefiners and other importers aren’t the only ones who care that vessels transporting crude have acceptable insurance.”Uninsured or underinsured vessels would not be allowed to enter any major port or pass through important shipping choke points such as the Bosporus or the Suez Canal,” Sergei Vakulenko, an energy analyst based in Germany, wrote in a blog post for the Carnegie Endowment for International Peace.Financial institutions also remain wary of running afoul of sanctions, which can lead to huge penalties from regulators.”It’s not just a transaction that involves a refiner and a Russian producer,” said Richard Bronze, head of geopolitics at Energy Aspects, a research consultancy based in London. “There’s all these other parties who have to be involved.”Russia has vowed to circumvent the new rules by leaning on state guarantees that in theory could be used in place of traditional insurance coverage. Reuters has reported that the state-controlled Russian National Reinsurance Company is now the primary reinsurer of Russian vessels.”This problem is solvable,” Dmitry Medvedev, deputy chair of Russia’s Security Council, said on his official Telegram channel. “The question of insurance of deliveries can be closed through state guarantees in the framework of international agreements with third countries. Russia has always been a responsible and reliable partner, and will stay that way going forward.”That means Russian shipments likely won’t be cut off entirely. “It’s disruptive, but it’s not going to wipe out all Russian exports,” Bronze said.But not everyone will view this as an adequate solution — especially given questions about whether Russia would be able to pay out claims should it need to while it’s subject to harsh sanctions.”There’s going to be a lot more doubt,” Bronze said. “I think it narrows the pool of countries that are willing to buy.”— Clare Sebastian contributed reporting.