- Monday saw the EU’s introduction of a price cap for Russian crude oil and a ban on Russian seaborne crude crude.
- Turkish oil tankers are now accumulating off Turkish shores. Ankara requires proof of insurance coverage.
- The request was rejected by shipping insurers because Turkey requested coverage that could allow them to be subject to sanctions violations.
A European Union price cap on Russian oil kicked in on Monday and it’s already causing shipping disruption — oil tankers are piling up off the coast of Turkey as Ankara is demanding paperwork that the vessels are fully insured,According to the Financial Times.
The pile-up happens just like an EU price capOf $60 a barrel price capRussian crude was introduced.
As Shipping insurance covers 90% of the world.It is provided by an organization primarily based in Europe. Russia must reduce its oil revenue by limiting how much coverage the insurers can provide — that’s because only those vessels carrying cargo priced below the EU cap can access Western maritime insurance.
But the Turkish government wants full insurance coverage for the ships — resulting in a standoff and traffic jam of 19 crude oil tankers waiting to cross Turkish waters, according to the FT which cites ship brokers, oil traders, and satellite tracking services.
In a notice issued on November 16, Turkey’s government is insisting on documentation of shipping insurance coverage “under any circumstances” — even when the ships breach sanctions “whether knowingly and intentionally or unknowingly and unintentionally”, according to a Statement by Gard posted Sunday,Norwegian shipping insurer that covers half the world’s merchant fleet.
Such requirements go beyond general information that is usually contained in a letter of entry for the ships, so the International Group of P&I Clubs — the protection and indemnity providers which represents a group of shipping insurers — has assessed that it “should not issue such a letter” to ships.
According to the statement, “Issuing a confirmation letter in these circumstances would expose Clubs to a breaching of sanctions under EU law, UK law, and US law.” The International Group of P&I Clubs is negotiating with the Turkish government.
The situation has had an adverse effect on traffic around the Turkish straits Of Bosphorus/Dardanelles, which connect exports from Russia’s Black Sea ports to global market. According to the FT report, the wait has been on since November 29, when the first ship arrived at the spot.
Insider sent a request for comment outside of regular business hours to the Turkish ministry of transport, but they did not immediately respond.
Moscow on its part has declared that it will not sell its crude oil below $60/barrel. Russian Deputy Prime minister Alexander Novak called the price limit an “interference” that could result in “destabilization,” shortages of energy resources and reductions in investment in the market. TASS,The state-owned news agency.
Novak stated that it could be used to oil and other products, not just to Russia but also to other countries.
US West Texas IntermediateOil futures rose 0.8% to $77.55 per barrel at 10.14 pm. ET Monday Brent crude oil futuresThe price was $83.36 per barrel, 0.8% higher
