Daily Management Review

Turkey Is Halting Oil Exports That Are Not Subject To Russian Sanctions, Raising Supply Concerns For Global Energy Market


Turkey Is Halting Oil Exports That Are Not Subject To Russian Sanctions, Raising Supply Concerns For Global Energy Market
Tankers carrying Kazakh oil are experiencing delays as a result of Turkey's new proof of insurance requirements for vessels carrying Russian oil, which is now subject to EU sanctions and a G7 price cap.
Kazakh oil is transported through Russia by pipeline and loaded onto tankers at the port of Novorossiysk. On the bill of lading, officials can trace the origin of the oil.
“It appears that all but one of the roughly twenty loaded crude tankers waiting to cross the straits are carrying Kazakh-origin oil,” a price cap official told CNBC. “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,” said the official, who was granted anonymity due to the sensitive nature of the geopolitical issues.
According to the number of vessels, over 20 million barrels of oil worth $1.2 billion are stranded.
Since the price cap and sanctions went into effect earlier this week, new Turkish insurance rules on oil tankers carrying Russian crude have slowed the movement of tankers off the coast of Turkey and between Russia's Black Sea ports and the Mediterranean.
If the delays continue, refiners will seek alternative supplies from other countries or reduce operating capacity due to a lack of oil, affecting the supply of gasoline and diesel, according to 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.
Buyers of Kazah oil include Asia, Europe, and some quantities on the U.S. East Coast.
According to VesselsValue, the average wait for tankers on the Bosphorus has increased by roughly 47% compared to last week, when there were 14 vessels with an average wait duration of 64 hours and a combined tonnage capacity of 1.46 million tons.
Wait times are normal, according to Kazakhstan's Energy Ministry, which issued a statement on Thursday.
“The waiting time in the Bosphorus and Dardanelles is six days for now. For the winter season, this is a normal wait; last year, the wait in the straits in December was about 14 days.”
The number of tankers waiting to pass through the Bosphorus is being tracked by MarineTraffic. According to the company, which uses AIS tracking of vessels, the number of tankers waiting has risen to 40, more than doubling in recent days.
“We can see a growing list of crude and chemical tankers waiting to cross the Bosphorous from either side, with a variety of reported AIS destinations, including mainly Turkey and Russia, but also Ukraine, Georgia, Italy,” said Nikos Pothitakis, spokesperson for MarineTraffic. “The vessels in question are mainly flagged by the Russia, Greece, Liberia and Marshall Islands registries.”
Wally Adeyemo, Deputy Secretary of the Treasury in the United States, met with Turkish Deputy Foreign Minister Sedat Onal on Wednesday to discuss the implementation of the price cap on Russian seaborne oil. According to a Treasury statement, Adeyemo emphasized that the price cap regime only applies to Russian-origin oil and does not require additional checks on ships passing through Turkish territorial waters. Both officials agreed that allowing seaborne oil to transit the Turkish straits under a simple compliance regime 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 under Turkey’s rule,” said the price cap official to CNBC. “These disruptions are the result of Turkey’s rule, not the price cap policy.”