Deepening Turkey tanker logjam causes oil embargoes to Russia

  • Resilience in oil and tanker markets
  • Turkey says taking insurance risk is out of the question
  • Yellen says oil from Kazakhstan should not be targeted
  • Ankara says most of the waiting ships are EU ships

ISTANBUL, Dec 9 (Reuters) – As the number of tankers waiting to leave the Black Sea through the Turkish strait continued to rise on Friday, Turkey emerged as a key stumbling block in a complex international plan to deprive Russia of wartime oil revenues.

Despite days of pressure from Western officials frustrated by the policy, Ankara has refused to scrap a new insurance inspection rule implemented earlier in the month.

A total of 28 oil tankers are lined up to leave the Bosporus and Dardanelles straits, Tribeca Shipping Company said on Friday.

G7 wealthy nations, the European Union and Australia have agreed to ban exports of Russian oil unless it is sold at forced low prices, or to providers of shipping services such as insurers, in a bid to deprive Moscow of wartime revenue.

Turkey’s maritime authority has said it will continue to remove oil tankers from its waters without proper insurance letters.

Western insurers cannot provide Turkey with the required documents because it could expose them to sanctions if the oil cargoes they cover are found to have been sold at prices above the limit.

Turkish authorities said the International Oil Spill Fund would not be able to cover the damage caused by a shipwreck in violation of sanctions.

“(It is) out of the question for us to take the risk that the insurance company will not meet its compensation obligation,” it said, adding that Turkey is in ongoing negotiations with other countries and insurance companies.

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It said most of the vessels waiting near the strait were EU vessels and that much of the oil was destined for EU ports – a move that has disappointed Ankara’s Western allies.

The shipping backlog is creating growing unrest in the oil and tanker markets. Millions of barrels of oil a day flow from Russian ports south through Turkey’s Bosphorus and Dardanelles straits into the Mediterranean Sea.

Kazakh oil

Most of the tankers waiting in the Bosphorus carry Kazakh oil and Treasury Secretary Janet Yellen said on Thursday that the US administration saw no reason to subject such shipments to Turkey’s new procedures.

He added that Washington had no reason to believe that Russia was involved in Turkey’s decision to block shipping.

The European Commission said on Friday that the delays were unrelated to the price cap and that Turkey could continue to check insurance policies “as before”.

“Therefore, we are in contact with the Turkish authorities to clarify and we are working to de-escalate the situation,” a spokesman told Reuters.

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

Relations between NATO allies Ankara and Washington have been rocky at times, however, with Turkey again last month calling on the US to end its support for Syrian Kurdish forces.

The Biden administration on Thursday imposed sanctions on a prominent Turkish businessman, Sidki Ayan, and his network of companies, accusing him of facilitating oil sales and money laundering on behalf of Iran’s Revolutionary Guards.

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Reporting by Darren Butler, Ken Cesar and Jonathan Sall in London; Written by Noah Browning Editing by Himani Sarkar, Clarence Fernandez, Jonathan Spicer and Francis Kerry

Our Standards: Thomson Reuters Trust Principles.

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