Status: 06/12/2022 5:27 pm
The EU oil price cap against Russia has led to a backlog of oil tankers in Turkish waters. An energy expert also warns of the catastrophe risk of a “parallel fleet” in Russia – with poorly insured or uninsured ships at all.
It remains to be seen how the EU and G7 oil sanctions against Russia, which took effect on Monday, will actually work – but the price cap is already showing the first knock-on effects.
Since Monday, a bottleneck of oil tankers has formed in the Turkish Strait between the Black Sea and the Mediterranean. At least 20 tankers are currently awaiting passage in Turkish waters, a shipping industry insider told Portal.
The reason for this is the sanctions requirement that Western insurers can only insure ships carrying Russian oil if it sells for no more than $60 a barrel (159 litres). According to several representatives of the oil industry, in this context, the Turkish authorities are demanding new evidence of valid insurance coverage, for example, for oil spills or collisions, writes the “Financial Times”. According to information from the insurance industry, the required documentation went far beyond the usual information requirements.
Impact on global oil trade
Much of the affected oil comes from Kazakhstan, which reaches Russian ports via pipelines and is not affected by sanctions, according to the British financial daily. Therefore, the oil tankers’ backlog suggests that the oil price ceiling is also affecting global non-Russian oil supplies. Every day, millions of barrels of oil are transported from Russian ports through the Turkish straits in the Bosphorus to the Sea of Marmara and then through the Dardanelles to the Mediterranean Sea. A US official told the Financial Times that the Turkish side had expressed concerns about delays with Britain.
More delays are expected in the coming days as operators scramble to obtain insurance under the new G7 price cap, the industry source told Portal.
Increased risk of oil spill?
With the world’s leading shipping and insurance companies based in G7 countries, the price cap could make it difficult for Russia to sell oil at a higher price. To get around the sanctions, Russia has already built a “parallel fleet” of more than 100 oil tankers that operate with insurance from non-Western companies or without any insurance.
According to Russia and energy expert Adnan Vatansever, the use of these ships increases the risk of an environmental disaster at sea. “The risk of an accident with an oil tanker is greater than it has been for a long time,” the head of the Russian Institute at King’s College London told Der Spiegel. Most Shadow Fleet ships are “fairly old”. “And although Western insurance companies carefully check the condition of tankers, I doubt that this is so important for Russian insurers,” says the expert.