After Russia Oil Oil Prices Caps were lifted, oil tankers begin to pile up off Turkey

  • Monday saw the EU’s price cap for Russian crude oil and ban on Russian seaborne crude oil go into effect.
  • Turkish shores are being flooded by oil tankers, and Ankara is demanding proof of insurance coverage.
  • Shipping insurers declined to cover the request as Turkey was asking for coverage which could expose them against a violation of sanctions.

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 is just as common EU price capOf $60 a barrel price capRussian crude oil was imported. 

As 90% of the world’s shipping insuranceIt is provided by a group mainly based in Europe. The aim is to curb Russia’s 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 posted on Sunday by Gard,A Norwegian shipping insurance that covers half the global 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 confirmation letters under these circumstances would expose Clubs to a breaching of sanctions under EU and UK law.” The International Group of P&I Clubs is negotiating with the Turkish government.

This has had an impact on traffic around the Turkish Straits of Bosphorus, Dardanelles and other ports that connect exports from Russia’s Black Sea ports with global markets. According to the FT, the wait for the first ship to arrive at the spot has been ongoing since November 29, according the report.

Insider’s request for comment from Turkey’s ministry to transport and infrastructure was not immediately answered.

Moscow, for its part, said it would not sell crude oil below $60 a barrel. Russian Deputy Prime minister Alexander Novak described the price cap as an “interference” that could lead to “destabilization, shortages in energy resources, and reduction of investment” on the market, according the TASS,The state-owned news agency.

Novak stated on Sunday that the technology could be used to not only oil, but also other products on market and not only to Russia, but to other countries.

US West Texas IntermediateOil futures were 0.8% higher at $77.55 per barrel by 10.14 p.m. ET Monday, while international Brent crude oil futuresThey were 0.8% higher at $83.36 per barrel

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