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G7 Price Cap Causes An Oil Tanker Traffic Jam In The Black Sea

Many oil tankers have dropped anchor near the key Turkish straits connecting the Black Sea with the Mediterranean, waiting for clearance from Turkish authorities who now demand new proof of insurance cover for tankers as the EU embargo and the EU-G7 price cap on Russian crude came into effect.  

Some 20 tankers, most carrying Kazakhstani – not Russian – crude were waiting offshore Turkey on Monday, the Financial Times reported, quoting shipbrokers, tanker-tracking services, and oil traders.

Turkey now demands new proof of insurance cover for tankers passing through the Bosphorus and Dardanelles straits, the main waterways linking the Black Sea with the Mediterranean. Most of the oil now sitting on tankers off Turkey is from Kazakhstan, shipbrokers told FT.

Kazakhstan ships its crude from Russian ports on the Black Sea and oil from Kazakhstan is not subject to the EU embargo or price cap.

According to the International Group of P&I Clubs, which provides protection and indemnity cover to about 90% of global shipping trade, the new Turkish request of proof goes “well beyond” the information that is usually necessary, FT noted.

While the demand from Turkey for proof of insurance could potentially create another bottleneck for global oil trade, the Turkish rules are not unreasonable, considering the aging tankers of the ‘dark fleet,’ which is now thought to be servicing a growing part of Russian crude flows.

Russia and entities willing to capitalize on trade with Russian oil have amassed in recent months a ‘shadow fleet’ of possibly hundreds of tankers whose new owners are unknown or little known, analysts and ship brokers say. Russia, which has rejected the price cap and has said it would not sell its crude to countries that have joined the mechanism, is looking at various ways to circumvent the sanctions by using its own fleet and insurance and ships of owners that are less scrupulous than the major West-based tanker owners and charterers.

By Tsvetana Paraskova for Oilprice.com

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  • Francisco Napoleao on December 06 2022 said:
    One thing is for sure Erdogan doesn't do anything without getting something in return.
    The thing about the Danish and Turkish straits as well as the Suez Canal is a major question.
    Is there any legal frame to deny entry of ships without international insurance? When international deals were signed for this sea roots there were no international insurance in place.

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