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Deepening Turkiye tanker logjam snarls Russia oil sanctions

MEMO | December 9, 2022

Turkiye emerged as a critical stumbling block to a complex international plan to deprive Russia of wartime oil revenues as the number of tankers waiting to exit the Black Sea through Turkish Straits continued to rise on Friday, Reuters reports.

Ankara has declined to scrap a new insurance inspection rule it implemented at the beginning of the month, despite days of pressure from Western officials frustrated by the policy.

A total of 28 oil tankers are in a queue seeking to leave the Bosphorus and Dardanelles Straits, the Tribeca Shipping Agency said on Friday.

G7 wealthy countries, the European Union and Australia agreed to bar providers of shipping services, such as insurers, from helping export Russian oil unless it is sold at an enforced low price, or cap, aimed at depriving Moscow of wartime revenue.

Turkiye’s maritime authority said it would continue to keep out of its waters oil tankers that lacked appropriate insurance letters.

Western insurers said they cannot provide the documents required by Turkiye as it may expose them to sanctions if it emerged that the oil cargoes they cover were sold at prices that exceed the cap.

The Turkish authority said that, in the event of an accident involving a vessel in breach of sanctions, it was possible the damage would not be covered by an international oil-spill fund.

“(It) is out of the question for us to take the risk that the insurance company will not meet its indemnification responsibility,” it said, adding that Turkiye was continuing talks with other countries and insurance companies.

It added the vast majority of vessels waiting near the Straits were EU vessels, with a large part of the oil destined for EU ports – a factor frustrating Ankara’s Western allies.

The ship backlog is creating growing unease in oil and tanker markets. Millions of barrels of oil per day move south from Russian ports through Turkiye’s Bosphorus and Dardanelles Straits into the Mediterranean.

Kazakh oil 

Most of the tankers waiting at the Bosphorus are carrying Kazakh oil and Treasury Secretary, Janet Yellen, said on Thursday the US administration saw no reason that such shipments should be subjected to Turkiye’s new procedures.

Washington had no reason to believe Russia was involved in Turkiye’s decision to block ship transits, she added.

The European Commission said on Friday the delays were unrelated to the price cap and Turkiye could continue to verify insurance policies in “exactly the same way as before”.

“We are therefore in contact with the Turkish authorities to seek clarifications and are working to unblock the situation,” a spokesperson told Reuters.

Turkiye has balanced its good relations with both Russia and Ukraine since Moscow invaded its neighbour in February. It played a key role in a United Nations-backed deal reached in July to free up grain exports from Ukrainian Black Sea ports.

Relations between NATO allies, Ankara and Washington, have at times been rocky,  as Turkiye last month renewed calls for the United States to stop backing Syrian Kurdish forces.

The Biden administration levied sanctions on Thursday on a prominent Turkish businessman, Sitki Ayan, and his network of firms, accusing him of acting as a facilitator for oil sales and money laundering on behalf of Iran’s Revolutionary Guard Corps.

December 9, 2022 - Posted by | Economics | ,

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