consequence of the price cap
Tankers with Russian oil are backing up on the Bosphorus
12/06/2022, 4:14 p.m
The price cap as part of the oil embargo against Russia prohibits not only shipping companies but also insurance companies from participating in the export of Russian oil if it costs more than $60. This indirect way of enforcing the sanction is beginning to have an effect.
The prices for some types of Russian oil are still above the $60 mark in some cases. But the price cap for crude oil from Russia imposed by the G7, the EU and Australia since yesterday is having an effect – among other things by causing a backlog of tankers with Russian oil off the Bosporus. As Reuters reports, at least 20 tankers are currently waiting in Turkish waters to take their cargo from Russian Black Sea ports towards the Mediterranean.
Turkish authorities are therefore stopping the ships to check whether they have proper insurance cover. The “Financial Times” also reports on tankers, some of which have been waiting for a passage permit for several days off the Dardanelles – the strait between the Sea of Marmara and the Mediterranean Sea. The background to this is that within the framework of the oil embargo against oil transported by ship and the oil price cap, which now also applies to the EU, European companies are prohibited from transporting and other services for the transport of Russian oil to third countries if the freight costs more than 60 dollars per freight has been paid.
With European shipping companies and insurers dominating these areas worldwide, it will be difficult for Russia to export oil on the usual scale as long as the price is above 60 dollars. For Turkey, on the other hand, the safety of shipping traffic in the Bosphorus has top priority. A tanker accident in the straits would be an ecological and economic catastrophe for the country.
Russia has reportedly assembled a so-called “shadow fleet” of more than 100 used tankers in recent months, acquired by unknown and sometimes anonymous buyers around the world. However, it is likely to be difficult to insure these ships with the well-known providers. Turkish and Russian authorities did not comment on the information from Reuters and the “FT”. The exact criteria on the basis of which the tankers are stopped therefore remained unclear.
Industry insiders reported to the “FT” that oil tankers with certificates from Russian insurers were apparently allowed to pass through the Turkish Straits, while those with Western insurance had been held up since the European embargo came into force. Ships that had loaded oil products such as gas oil or diesel instead of crude oil were also allowed to pass. For these products, the EU embargo will not come into force until next year.