Oil tanker traffic jam forms in Turkey after Russian price cap
An oil tanker traffic jam is forming in Turkey following the introduction of a cap on the price of Russian crude, the Financial Times reported on Monday.
Four oil industry executives told the Financial Times that Turkey has demanded new proof of full insurance coverage for vessels crossing the Bosphorus and Dardanelles straits.
A price cap on Russian oil agreed upon by the EU, G7, and Australia came into force on Monday. It aims to restrict Russia's revenue as punishment for its invasion of Ukraine, while making sure Moscow keeps supplying the global market.
The measure means only tankers transporting crude bought at or under $60 a barrel can access insurance and financial services.
The G7 nations - Canada; France; Germany; Italy; Japan; Britain; and the United States - provide insurance services for 90 percent of the world's cargo and the EU is a major player in sea freight, giving them leverage to pass the cap on to the majority of Russia's customers around the world.
According to the Financial Times, around 19 crude oil tankers were waiting to transit Turkish waters on Monday. The backlog comes as Ankara seeks proof from the tankers that their insurance is in place to cover incidents such as oil spills and collisions.
The Bosphorus strait connects the Black Sea to the Sea of Marmara and is one of the world's busiest maritime passages. By some estimates, around 48,000 ships pass through the strait each year, which can be difficult to navigate. This is in part due to the narrow width of some parts of the waterway. More than three percent of global supply - mainly from Russia and the Caspian Sea - passes through the 27-kilometre waterway.
The traffic jam is the first indication of the price cap hindering global oil supplies.
One oil industry source with knowledge of the situation told the Financial Times that Russian insurance companies had given letters of confirmation to allow passage through Turkish waters and that shippers with insurance from western firms were the ones being held up by Turkish authorities.