Dusseldorf The sanctions rules against Russian oil imports that were launched on Monday have unintended consequences: while Russian oil continues to flow unhindered to buyers in India and China, for example, the supply of Kazakh oil to Europe is faltering.
According to a report by the monitoring company Tankertrackers, which specializes in the analysis of ship movements, eight tankers loaded with crude oil have been stuck in Turkish waters for several days. According to information from the news platform “Splash 247”, instead of crossing the straits of the Dardanelles in the direction of Greece, they are currently anchored at the increasingly scarce anchorages of Icdas and Sarkoy in the Sea of Marmara south-west of Istanbul.
The traffic jam could increase in the coming days. “Russian Tanker Tracker”, a bot developed by Greenpeace that uses satellite data to track oil and gas tankers, currently reports 24 tankers transporting Russian fossil fuels to Europe. Two of them left Russia, according to the Twitter trackable service in the last 24 hours.
Traffic jams are likely to occur in the opposite direction as well. According to the Sea/ shipping platform, 148 tankers are destined for Russia in the next two weeks.
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The accumulation of ships near the Bosphorus was triggered by the G7 countries’ tightened sanctions against Russia. Since Monday, oil tankers have only been allowed to transport Russian crude oil if it was purchased at a maximum price of $60 per barrel. With the price cap, the industrialized countries want to prevent Moscow from excessively enriching itself from excessive raw material prices and using the special income to finance the aggressive war in Ukraine.
>> Read also: The consequences of the oil price cap and oil embargo
The real lever for enforcing the embargo is insurance law. For example, since December 5, tankers transporting overpriced Russian oil have immediately lost coverage from their insurers.
This “Protection and Indemnity” (P&I) insurance is usually provided by national insurance clubs which have come together under the umbrella of a London company. After all, tanker accidents harbor risks that have to be secured with billions of euros. The P&I Clubs have a market share of 90 percent worldwide.
But since Turkey issued an order in mid-November, the insurers have been at loggerheads with the government there. Ankara requires companies to maintain their risk protection for ships navigating Turkish waters “under all circumstances” from December 1st. This blank check must apply even “if the insured violates sanctions knowingly and intentionally or unknowingly and unintentionally”.
Kazakh oil also hit by traffic jams
The Norwegian ship insurer Skuld, spokesman for the P&I clubs, emphatically rejected such a guarantee on Monday. “Issuing a confirmation letter in these circumstances would expose the club to violating sanctions under EU, UK and US law,” the world’s largest shipping insurance company said. Therefore, the insurers could not comply with Turkey’s request. However, Skuld announced that he would enter into negotiations with Ankara at short notice.
Crude oil, which is not subject to the sanctions regulations, is also affected by the traffic jams on the Bosphorus. For example, Kazakhstan pumps oil via a pipeline to the Russian port of Novorossiysk, from where it is also shipped to Europe via the Black Sea.
According to Tankertrackers.com, 6.5 million of the seven million barrels currently shipped from Russia come from the Caspian Pipeline Consortium. Its oil blend consists of at least 85 percent Kazakh oil. The USA also imports the energy source, although the remaining amount comes from Russia.
For Ankara, on the other hand, there is still great interest in ensuring that ships have strict insurance cover. In order to circumvent possible sanctions, Moscow-affiliated shipping companies are said to have bought 29 VLCC supertankers in recent months, each capable of transporting more than two million barrels.
Pressure on Russia: EU implements oil price cap and embargo
The country is likely to have ordered another 31 medium-sized tankers, each with a capacity of one million barrels, alongside 47 smaller vessels capable of transporting around 700,000 barrels. That’s according to a report by ship broker Braemar to the International Energy Agency, which the Financial Times quoted a few days ago.
A large part of the ships have already reached the age of twelve to 15 years, it says. Such ships are usually scrapped after about 20 years. They therefore represent an increased risk for the environment on the Bosporus.
Russian oil is also transported by “Shadow Fleet”.
Russian tankers that are not accepted by the P&I clubs can probably only be offered as an alternative in their own country by the Moscow insurance company Ingostrakh. However, it is not yet known whether it will expand its involvement in the ship market in view of the embargo. According to a media report last week, the Russian deputy transport minister said that Chinese authorities would not yet recognize Russian insurance companies, while India and Turkey would.
In a roundabout way
2.1
million barrels of oil
is now shipped to India and China every day by Russia – more than twice as much as before the Ukraine invasion.
These and numerous other Russian countries have long been supplied by tankers that are already on sanctions lists – the so-called “shadow fleet”. According to Braemar, this includes 80 supertankers of the VLCC class and 160 small and medium-sized ships that transported Iranian or Venezuelan oil at least once in the past year and were thus involved in the illegal trade.
According to Braemar, since April this year 33 tankers that previously carried either Iranian or Venezuelan crude oil have now also loaded Russian oil or oil products. Experts are already warning that these mostly old ships significantly increase the risk of environmental disasters.
A large part of the capacity is used for deliveries to China and India. 2.1 million barrels are now being shipped there every day, while before the Ukraine invasion, just 900,000 barrels per day were counted on this route.
More: The oil price cap can do something that other sanctions against Russia cannot