February 9, 2023

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Turkey stops oil not subject to Russian sanctions, adding to energy supply concerns

Turkey stops oil not subject to Russian sanctions, adding to energy supply concerns

Cargo ships and vessels traverse the Bosphorus, a body of water that connects the Black Sea with the Sea of ​​Marmara and the Mediterranean Sea via Istanbul, Turkey. Above, the Russian-flagged Volga River Taganrog oil tanker passes south through the Bosphorus Strait in October 2022.

Norphoto | Norphoto | Getty Images

Tankers filled with Kazakh oil are entangled in travel delays through the Bosphorus Strait as a result of Turkey’s new proof of insurance measures for ships carrying Russian oil now subject to European Union sanctions and the price ceiling of the G7 countries.

Kazakh oil passes through a pipeline through Russia and is loaded onto tankers at the port of Novorossiysk. Officials can track the source of the oil on the bill of lading.

“It appears that all but one of the twenty laden crude oil tankers waiting to cross the strait are carrying Kazakh oil,” a price cap-setting official told CNBC. “These shipments will not be subject to price caps under any scenario, and there should be no change in their insurance status from Kazakh shipments in the previous weeks or months,” said the official, who was not identified due to the sensitive nature. of geopolitical issues.

Based on the number of ships, more than 20 million barrels of oil worth about $1.2 billion have been suspended.

Turkey’s new insurance rules for oil tankers carrying Russian crude have slowed the movement of tankers off Turkey’s coast and between Russian Black Sea and Mediterranean ports since the beginning of this week when price caps and penalties came into force.

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If delays escalate, refiners will seek alternative supplies from other countries or cut capacity because they don’t have enough oil, affecting gasoline and diesel supplies, said Andrew Lipow, president of Lipow Oil Associates.

“If this continues for another week, we will start to see an impact on the oil market,” Lipow said.

Among the buyers of Rainbow oil are Asia, Europe and some volumes on the East Coast of the United States.

Increased waiting times for carriers

Nikos Potitakis, a spokesperson for the company, said: “We could see a growing list of tankers of crude oil and chemicals waiting to cross the Bosphorus from either side, with a variety of AIS destinations reported, mainly including Turkey and Russia, but also Ukraine. Georgia and Italy. marine traffic. The ships in question fly the flags of Russia, Greece, Liberia and the Marshall Islands.

On Wednesday, US Deputy Treasury Secretary Wali Ademo spoke with Turkish Deputy Foreign Minister Sedat Onal to discuss the implementation of price caps for Russian seaborne oil. Adeyou stressed that the price cap system applies only to oil of Russian origin and does not necessitate additional inspections on ships passing through Turkish territorial waters, according to a statement from the Treasury Department. The two officials said a simple compliance regime by Turkey to allow seaborne oil to pass through the Turkish straits would help keep global energy markets well supplied.

“The price cap policy does not require ships to seek unique insurance guarantees for each individual voyage, as required by Turkish law,” the price cap official told CNBC. “These disturbances are the result of Turkish rule, not the price cap policy.”