New Delhi just picked a side. It’s not the side of the G7, the side of the "rules-based order," or the side of the London-market underwriters who’ve run the high seas for centuries. It’s the side of the ledger that keeps the lights on.
In a move that’s as much about survival as it is about geopolitical posturing, India has granted interim approval to four Russian insurance firms. These companies—Sogaz, AlfaStrakhovanie, Ingosstrakh, and VSK—now have the green light to provide the mandatory third-party liability cover for ships docking at Indian ports. It’s a bureaucratic patch for a massive, structural leak in the global energy trade.
The Western world tried to build a cage. They called it the $60 price cap. The logic was simple: if you want to ship Russian oil, you have to play by our rules, or you won’t get the insurance that makes the voyage legal. Since about 90% of the world’s Protection and Indemnity (P&I) clubs are based in the West, the G7 figured they held all the cards. They thought they could starve the Russian war chest without actually turning off the global oil tap.
They forgot that sovereign nations don't like being told which gas station to use.
India’s Director General of Shipping just handed out these permits like hall passes. It’s "interim relief," a term that suggests this is a temporary fix, but we all know how long temporary government measures actually last. This isn't about some grand vision of a multi-polar world. It’s about the fact that India’s refining industry—a massive engine of its GDP—runs on the heavy, discounted crude coming out of the Urals. When the Western insurance giants backed away to avoid the stink of sanctions, India had two choices: stop the flow or find new plumbing.
They chose the new plumbing.
It’s a gritty, unglamorous solution. Russian insurance isn't exactly the gold standard in the maritime world. When a tanker hits a reef or spills 500,000 barrels of crude into the Indian Ocean, you want a London-based P&I club with deep pockets and a 200-year history of paying out. You don’t necessarily want a firm whose solvency is tied to the whims of the Kremlin and a banking system currently cut off from SWIFT.
But for New Delhi, that’s a tomorrow problem. The today problem is the price of a liter of diesel in Mumbai.
The friction here is palpable. By allowing these insurers in, India is effectively bypassing the "price cap" mechanism. If the insurance is Russian and the ship is part of the so-called shadow fleet, the $60 limit becomes a suggestion rather than a law. The West can grumble, and they will, but what’s the move? Sanctioning the Indian ports that receive the oil? Good luck with that. India is the world’s fifth-largest economy and a critical counterweight to China. You don't sanction your most important, if difficult, friend over a few insurance certificates.
The trade-off is the risk. We’re talking about aging tankers—the rust-buckets of the "dark fleet"—carrying millions of gallons of volatile cargo underwritten by companies that don't share data with the International Group of P&I Clubs. It’s a giant game of maritime chicken. If one of these vessels cracks open, the environmental bill will be astronomical. And when the time comes to collect, the legal battle won't be fought in a civilized courtroom in London. It’ll be a mess of jurisdictional loopholes and shrugged shoulders.
The move also signals the slow, painful fragmentation of global finance. We used to have one system. It was expensive and Western-centric, but it worked because everyone agreed on the math. Now, we’re seeing the rise of "good enough" alternatives. It doesn't have to be better than the Western system; it just has to be functional enough to keep the tankers moving.
This isn't a diplomatic breakthrough. It’s a hack. It’s New Delhi looking at a complex geopolitical firewall and finding a back door that’s been left unlocked. The G7 wanted to use insurance as a weapon of soft power. India just showed them that a weapon only works if the other guy is afraid to get hit.
So the oil keeps moving, the Russian firms get their stamps of approval, and the West’s carefully constructed sanctions regime gets another hairline fracture. It’s business as usual in a world that’s increasingly allergic to the old rules.
What happens the first time a Russian-insured tanker actually hits something, and the "interim relief" turns into a multi-billion dollar liability that no one wants to pay?