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Leading shipping journal Lloyd’s List has reported that seven loaded Suezmax vessels that are fully compliant with the $60 per barrel price cap and its requirements have sailed from Russian waters.
According to the journal, checks have revealed that all seven vessels have secured insurance with International Group P&I clubs, which requires proof of compliance with the G7 cap of $60 per barrel before marine insurance can be provided.
Three weeks ago, in a surprise twist to the Russian oil saga, Turkey announced that it will start demanding that oil tankers passing through its key Bosphorus shipping strait to provide proof that they have adequate insurance. Starting Dec. 1, the Turkish Ministry of Transport requires ships hauling oil through the waterway and the nearby Dardanelles strait to provide a letter from their insurer saying that cover will be provided for that specific vessel voyage and cargo.
According to the Ministry, ships sailing through the straits uninsured could result in significant damage to the waterway and vessel traffic in the event an uninsured ship has an accident. The move is likely to negatively impact Russian tankers if they struggle to obtain the necessary protection and indemnity insurance. CNBC reported that Turkey’s new insurance requirement was causing major delays for ships loaded with Russian crude as they attempted to get clearance from Turkish authorities.
Meanwhile, Japan’s buyers of Russian LNG are currently assessing how changes to shipping insurance triggered by the ongoing war in Ukraine will affect supplies from the key Sakhalin-2 project in Russia’s Far East, Bloomberg has reported. Japanese insurance companies Tokio Marine Holdings Inc., Sompo Holdings Inc. and MS&AD Insurance Group Holdings Inc. will cease providing cover for marine hull war risks in Russian, Ukrainian and Belarusian territorial waters from Jan. 1, 2023.
Russia's Finance Minister Anton Siluanov has said that the country’s budget deficit in the coming year might exceed the expected 2% of GDP as the oil price cap takes a hit on export income. This marks the first time a Russian official has acknowledged that the $60 per barrel price cap imposed on Russia by Europe and G7 nations will negatively impact its economy. Siluanov says the country will tap debt markets to bridge the deficit. Russia expects to use just over 2 trillion roubles ($29 billion) from the National Wealth Fund (NWF) in 2022 as total spending exceeds 30 trillion roubles, above the initial budget.
By Alex Kimani for Oilprice.com
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Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.