$1.2 billion worth of oil stuck in Turkish straits

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International marine oil traffic faced a major crisis on Friday as the number of oil tankers waiting in the Black Sea to pass through Istanbul’s Bosphorus Strait on the way to the Mediterranean rose to 20 on Friday, Tribeca shipping agency said, while Turkey continued talks to resolve an insurance dispute behind the build-up.

Eight tankers were also waiting for passage through the Dardanelles strait into the Mediterranean, down from nine a day earlier, Tribeca said, making a total of 28 tankers waiting for southbound passage.

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

Turkey’s maritime authority said it would continue to block oil tankers that lacked the appropriate insurance letters, and it needed time for checks, dismissing pressure from abroad over the lengthening queue.

The 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 Turkey was continuing talks with other countries and insurance companies.

It said 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.


But most of the tankers waiting at the Bosphorus are carrying Kazakh oil and Treasury Secretary Janet Yellen said on Thursday the U.S. administration saw no reason that such shipments should be subjected to new procedures.

“These cargoes would not be subject to the price cap under any scenario, and there should be no change in the status of their insurance from Kazakh shipments in previous weeks or months,” one western official involved in the price cap told the Financial Times.

“The price cap policy does not require ships to seek unique insurance guarantees for each individual voyage, as required under Turkey’s rule. These disruptions are the result of Turkey’s rule, not the price cap policy,” the official said.

Oil produced in Kazakhstan by companies including Chevron and ExxonMobil is exported via pipeline across Russia to ports on Russia’s Black Sea coast, where it is loaded on to tankers for the journey through the Turkish Straits to the Mediterranean. Its movement is not restricted under the west’s Russian sanctions, FT said.


Based on the number of vessels, CNBC calculated that over 20 million barrels of oil equaling $1.2 billion is currently stuck in Turkey.

If delays mount, refiners will seek alternative supplies from other countries or they will reduce operating capacity because they don’t have enough oil, which impacts the supply of gasoline and diesel, said Andrew Lipow, president of Lipow Oil Associates.

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

Source: Gerçek News

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