A traffic jam has accumulated for oil tankers in Turkish waters after Western powers imposed a “price cap” targeting Russian oil, and authorities in Ankara demanded that insurance companies pledge that any ships sailing in its strait are fully covered.
Under European Union sanctions that took effect on Monday, tankers carrying Russian crude oil have been denied access to Western marine insurance unless the oil is sold under G7 price caps. 60 dollars a barrel. The cap was introduced to keep the oil flowing while continuing to shrink Moscow’s revenues.
Four oil industry executives said Turkey had requested a new proof of insurance in light of the price cap. A spokesman for the Turkish Transport Ministry did not immediately respond to a request for comment
Russia pledged to continue exporting its oil even if it was cut off from Western insurance markets. Russia has said it will not deal with any country that adheres to the cap.
About 19 crude oil tankers were waiting to cross Turkish waters on Monday, according to ship brokers, oil traders and satellite tracking services. The ships had dropped anchor near the Bosphorus and Dardanelles, the two straits that connect Russia’s Black Sea ports to international markets. The first oil tanker arrived on November 29 and has been waiting for six days, according to a ship broker who asked not to be named.
Tankers waiting in and around Turkish waters are the first sign that a price cap could disrupt global oil flows out of Russian exports.
According to shipbrokers and TankerTrackers.com, which monitor global oil shipments, most of the oil on ships off Turkey comes from Kazakhstan. Kazakhstan’s oil reaches Russian ports through a pipeline and is not targeted by Western sanctions.
Ankara has asked all crude oil tankers transiting through the Turkish Straits to submit letters from protection and compensation providers, known as P&I clubs, confirming that insurance cover will remain in place to cover incidents such as oil spills and collisions.
But the International Group of Protection and Indemnity Clubs, which represents 13 mutual insurers that provide liability coverage for about 90 percent of global shipping, said on Monday that the Turkish request “far exceeded” the public information normally required.
It was not possible for P&I providers to guarantee coverage even if sanctions were violated, the group said in a statement from one of its members.
Nick Shaw, the group’s chief executive, told the Financial Times that he is in “ongoing constructive discussions with the relevant authorities to try to resolve the situation”.
A US Treasury official said the US was “aware of how the Turkish government’s new policy could complicate the movement of ships through the Turkish Straits,” and had “raised these concerns, along with the UK, in recent dealings with Turkish officials.”
Russia has collected the so-called “Shadow Fleet” More than 100 tankers to try to circumvent Western restrictions on their oil exports, which may operate either without insurance or from suppliers outside the West.
An oil industry participant with knowledge of the situation said that Russian insurance companies submitted letters of confirmation to Turkish authorities in order to secure passage through Turkish waters. The person added that it was the shippers who had insurance from Western service providers who were stopped.
Turkish authorities have also allowed tankers carrying refined products such as gasoline and diesel instead of crude oil, as EU sanctions on these fuels will not enter until February.
Additional reporting by Chris Cook and James Poletti
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