Cargo ships and ships pass through the Bosphorus Strait, a body of water that connects the Black Sea with the Sea of Marmara and the Mediterranean Sea through Istanbul, Turkey. Above: The Russian-flagged oil tanker Volga River Taganrog heads south through the Bosphorus Strait in October 2022.
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Tankers full of Kazakh oil are mired in delays crossing the Bosphorus Straits as a result of Turkey’s new insurance certificate for ships carrying Russian oil, now subject to EU sanctions and a G7 price cap.
Kazakh oil is pipelined through Russia and loaded onto tankers at the port of Novorossiysk. Officials can trace the origin of the oil on the bill of lading.
“It appears that all but one of the twenty or so loaded crude oil tankers waiting to cross the straits are carrying oil of Kazakh origin,” a price cap official told CNBC. “These cargoes would not be subject to the price cap in any scenario and the status of their insurance to Kazakh shipments in the past few weeks or months should not change,” said the official, who was granted anonymity due to the sensitivity of the geopolitical issues.
Based on the number of ships, over 20 million barrels of oil worth $1.2 billion are stuck.
New Turkish insurance rules for oil tankers carrying Russian crude have slowed the movement of tankers off the coast of Turkey and between Russia’s Black Sea and Mediterranean ports since the price cap and sanctions first came into effect earlier this week.
As delays mount, refiners will seek alternative supplies from other countries or reduce operating capacity because they don’t have enough oil, affecting supplies of gasoline and diesel, said Andrew Lipow, president of Lipow Oil Associates.
“If this continues for a week, we will start to see an impact on the oil market,” Lipow said.
Kazah oil buyers include Asia, Europe and some East Coast US shores.
Tanker wait times are increasing
VesselsValue tells CNBC that the average wait time for tankers on the Bosphorus increased about 47% compared to last week when there were 14 vessels with an average wait time of 64 hours and a combined tonnage capacity of 1.46 million tons.
Kazakhstan’s Energy Ministry said in a statement Thursday that waiting times were typical. “The waiting time on the Bosphorus and the Dardanelles is six days for the time being. For the winter season this is a normal waiting time; last year the waiting time in the straits in December was about 14 days.”
MarineTraffic monitors the number of tankers waiting through the Bosphorus. The company, which uses AIS to track vessels, says the number of tankers waiting is now up to 40 and has more than doubled in recent days.
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“We can see a growing list of crude oil and chemical tankers waiting to cross the Bosphorus from both sides with a variety of reported AIS targets including mainly Turkey and Russia but also Ukraine, Georgia and Italy” , said Nikos Pothitakis, spokesman for maritime transport. “The ships in question are mainly identified by the registers of Russia, Greece, Liberia and the Marshall Islands.”
On Wednesday, US Deputy Treasury Secretary Wally Adeyemo spoke with Turkey’s Deputy Foreign Minister Sedat Onal to discuss implementation of the price cap on Russian sea oil. Adeyemo stressed that the price cap regime applies only to oil of Russian origin and does not require additional controls on vessels passing through Turkish territorial waters, according to a statement by the Finance Ministry. Both officials said that a simple compliance regime for Turkey, allowing maritime oil to transit through Turkey’s Straits, would help keep global energy markets well-supplied.
“The price cap policy does not require ships to obtain unique insurance guarantees for each individual voyage, as is required by Turkish rule,” the price cap official told CNBC. “These disruptions are the result of Turkish rule, not price cap policies.”
