The oil tanker traffic jam in the Bosphorus and Dardanelles Straits is growing, the Tribeca shipping agency told Reuters on Friday.
The number of oil tankers idling in the Bosphorus and Dardanelles Straits waiting to enter Turkish waters has swelled to 28 as of Friday, compared to 20 on Monday.
Before they can move on, Turkey requires all oil tankers to show proof of proper insurance coverage for their cargo, in light of the recently implemented G7 oil price cap on Russian crude.
Turkey's requirements come despite Western assurances that not every crude oil tanker should have to prove that it has proper coverage. The insurance checks are creating extensive delays in shipping, and is worrying not only crude oil buyers, but Russia as well.
Part of the worry is that Western insurers are saying they are unable to provide the documents that Turkey is requesting, because it could expose them to sanctions should it be found out later that the oil cargo that they are carrying were sold at prices that went beyond the G7's $60 price cap.
Turkey has referred to its insurance-checking process as "routine", arguing that if there were an accident involving a vessel that was found later to be in breach of sanctions, it is possible that the damage wouldn't be covered by the international oil-spill fund.
"(It) is out of the question for us to take the risk that the insurance company will not meet its indemnification responsibility," Turkey said.
Much of the crude oil being held up in the Strait is crude oil from Kazakhstan, not Russia. Kazakhstan ships its crude oil from Russian ports on the Black Sea-and it isn't subject to the G7 oil price cap rules.
By Julianne Geiger
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Comments
Anyhow all incredibly expensive manner in which oil and distillate product be transported if transported at all.
Turkey is insisting that oil tankers show proof of proper insurance coverage for their cargo in light of the recently implemented G7 oil price cap on Russian crude. But Western insurers are saying they are unable to provide the documents that Turkey is requesting, because it could expose them to sanctions should it be found out later that the oil cargoes that they are carrying were sold at prices above the G7’s $60 price cap.
I can only hazard three explanations for Turkey’s stance.
1- Turkey is is genuinely worried about an accident involving one of the tankers in Turkish waters particularly if it didn’t have proper insurance cover.
2- It is possible that the Turks are deliberately using the jam to force the United States to agree to deliver F-16 fighters to Turkey and also force the EU to accept Turkey becoming a gas hub with Russian gas delivered to the EU via Russia’s Turk Stream gas pipeline.
3- It is equally possible that Turkey is trying to undermine the price cap thus indirectly helping Russia in return for special favours.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert