The unintended consequences of the new tanker trading era in the eastern Mediterranean are that Russian crude is still flowing to Asian buyers while Kazakh oil has been hit by delays.
Following the first day of the Russia oil price cap and the European Union ban on seaborne Russian crude imports, the largest upshot has been a growing cluster of frustrated tankers in Turkish waters.
TankerTrackers.com reports that eight tankers currently laden with crude oil have been waiting several days to transit the Dardanelles Strait from the Black Sea. They’re currently afloat in the increasingly busy Icdas and Sarkoy anchorages of Turkey. The vessels require additional paperwork from their P&I clubs in order to transit the canal due to the new G7-led embargo. According to TankerTrackers.com 6.5m out of the 7m barrels currently afloat derive from the Caspian Pipeline Consortium, which is a blend consisting of at least 85% Kazakh oil, and is even imported by the US as Kazakh oil, even though the remaining amount is Russian.
Concerned about the growing risk of environmental damage from the growing swathe of vintage dark tankers leaving Russia, Turkey issued a notice last month which requires all ships transiting or entering Turkish waters from December 1 to provide letters of confirmation from the owner’s P&I club attesting that cover will remain in place under any circumstances throughout the duration of the transit or the time the ship is in Turkish waters or the time it is in a port or terminal.
The International Group of P&I Clubs has not acquiesced to this demand and as a result of this impasse, ship queues are building up in Turkish waters (see map below).
Issuing a confirmatory letter would expose clubs to a breach of sanctions under EU, UK and US law, Skuld, a Scandinavian P&I club, explained in a release. Urgent discussions are now underway between the EU, Turkey and the insurers to find a solution to this shipping speed bump.
Increasing congestion in Turkish waters has seen many accidents. Two general cargo ships collided last Friday at the Ahirkapi anchorage in Istanbul, resulting in serious damage to both ships. This was the seventh prang in the same anchorage recorded this year.
According to data from shipping platform Sea/, 148 tankers are destined for Russia in the next two weeks. 83 are ballasters, 30 are laden and the rest are partially laden.
Russian Tanker Tracker, a bot created by NGO Greenpeace tracking oil and gas tankers leaving Russian ports using public AIS/satellite data from MarineTraffic, counts 24 tankers carrying Russian fossil fuels bound for Europe, including two which left Russia in the last 24 hours.
Russia has pivoted its crude sales east to Asia in the face of the West shunning it in the nearly 300 days since the invasion of Ukraine started.
How much cargo it will manage to move to Asia’s two largest countries remains to be seen.
“Despite not joining a ban, China and India, the world’s largest and third-largest crude importers, may find it difficult importing as much crude as they have in recent months due to shipping capacities, financing and insurance constraints,” analysts at Xclusiv Shipbrokers suggested in a recent market update.
Ulf Bergman, senior economist at chartering platform Shipfix, said that assuming the price cap is enforceable and that Russia, as previously stated, will not sell to anyone adhering to it, the seaborne trade in Russian crude oil is likely to shift to older and non-EU-flagged vessels.
“Freight rates and asset valuations for older tankers are likely to benefit. Tankers previously used in other sanctions-busting trades are likely to find employment shipping Russian crude to customers in Asia and elsewhere, circumventing any sanctions/price caps,” Bergman told Splash.
Analysts at broker Affinity maintained with the main importers of Russian crude outside the EU owning about 26% of the world tanker fleet, and around 31% of the global chemical tanker capacity – which could switch to CPP, there could also be a reshuffle in carrying capacity, with national fleets moving Russian volumes, and most of the other carriers doing “business as usual” in their unsanctioned market.
Pictured below is a playback of all vessel types activity in and around the Bosphorus during the last 24 hours as shown on MarineTraffic Live Map with red dots indicating ships idling, waiting to transit.
