An oil tanker traffic jam has built up in Turkish waters after Western powers launched a “price cap” against Russian oil and authorities in Ankara demanded that insurers promise that all ships passing through the straits were fully covered.
Under EU sanctions that took effect on Monday, tankers loading Russian crude will not have access to Western maritime insurance unless the oil is sold below the G7 price cap of $60 a barrel. The cap was introduced to maintain oil flow while depressing Moscow’s revenues.
Four oil industry executives said Turkey had demanded 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 has vowed to continue exporting its oil even as it is cut off from Western insurance markets. Russia has said it will not do business with a country that adheres to the limit.
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 anchored near the Bosphorus and Dardanelles, the two straits connecting Russia’s Black Sea ports to international markets. The first tanker arrived on Nov. 29 and waited six days, according to a ship broker who asked not to be named.
The tankers waiting in and around Turkish waters are the first sign that the price cap could disrupt global oil flows beyond Russian exports.
Much of the oil on the ships off the coast of Turkey comes from Kazakhstan, according to shipbrokers and TankerTrackers.com, which track global oil shipments. The oil from Kazakhstan arrives through pipelines in Russian ports and is not the target of Western sanctions.
Ankara has asked all crude tankers passing through the Turkish straits to provide letters from their protection and indemnification providers, known as P&I Clubs, confirming that insurance coverage remains in place to cover incidents such as oil spills and collisions.
But the International Group of P&I Clubs, which represents 13 mutual insurers that provide liability coverage for about 90 percent of global shipping, said on Monday that Turkey’s request “went well beyond the general information normally required.”
It was not possible for P&I providers to guarantee coverage even in the event of a violation of the sanctions, the group said in a statement from one of its members.
Nick Shaw, the group’s CEO, told the Financial Times that it is “engaged in “ongoing constructive talks with the relevant authorities to try and resolve the situation”.
Russia has assembled a so-called “shadow fleet” of more than 100 tankers to try to get around Western restrictions on its oil exports, which may operate without insurance or from suppliers outside the West.
An oil industry participant with knowledge of the situation said Russian insurance companies had sent letters of confirmation to Turkish authorities to secure passage through Turkish waters. The shippers with insurance from Western carriers were the ones held up, the person added.
Tankers carrying refined products such as petrol and diesel instead of crude oil were also allowed through by Turkish authorities, as EU sanctions on those fuels do not take effect until February.
Additional reporting Chris Cook and Ian Smith