Turkey is blamed for the oil disruption by Western officials.
The disruption of crude exports from the Black Sea has been attributed to Turkey by Western officials, who have emphasized that there was no justification for blocking transit through the Turkish Straits.
Due to regulations that prevent tankers transporting Russian crude from getting European maritime insurance unless the oil is sold for $60 per barrel or less, at least 22 crude tankers have been prevented from entering Turkish seas due to concerns in Ankara that the shipments may be uninsured.
However, two western officials argued that the ships, the majority of which are carrying oil from Kazakhstan rather than Russia, should be permitted to pass.
One western source participating in the price cap informed the Financial Times that "it appears that all but one of the roughly 20 loaded crude tankers waiting to cross the straits are carrying oil of Kazakh origin. 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."
Companies like Chevron and ExxonMobil extract oil in landlocked Kazakhstan, which is then piped across Russia to ports on the Black Sea coast. From there, the oil is loaded into tankers to go via the Turkish Straits to the Mediterranean. The Russian sanctions imposed by the west do not impede its mobility.
Turkey has demanded that all crude tankers passing through the Turkish Straits provide proof of current insurance coverage for events like oil spills and crashes, claiming that the G7 pricing cap has raised the hazards of uninsured boats in its waters.
90% of the sector receives preventative and indemnity insurance from the International Group of P&I Clubs, which has stated it cannot comply. According to it, Turkey's desire would force P&I Clubs to provide coverage even if it became out that a vessel had broken sanctions.
Regardless of whether the cargo was Russian or Kazakh, Western officials defended the price restriction mechanism and claimed Turkey's request for further guarantees from exporters was unwarranted.
"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," according to the official involved in the price cap.
On Wednesday, Wally Adeyemo, the deputy Treasury secretary for the United States, and Sedat Onal, the deputy foreign minister of Turkey, spoke about the issue. Following the call, the US Treasury released a statement stating that "both officials highlighted their shared interest in keeping global energy markets well-supplied by creating a simple compliance regime that would permit seaborne oil to transit the Turkish straits."
On Tuesday, the UK Treasury announced that the US, EU, and UK were closely coordinating with Turkish officials to find a solution. "There is no reason for ships to be denied access to the Bosporus Straits for environmental or health and safety concerns," according to the announcement.
The risk of uninsured or insured vessels in the Turkish Straits has increased, according to executives in the shipping sector, despite the price cap system, which was intended to keep Russian oil flowing.
In order to get around the limits and keep delivering petroleum to countries like China and India, Russia has declared that it will not sell oil to any buyer who wants to comply with the price cap. Russia has also put together a "shadow fleet" of ships.
By fLEXI tEAM