Page 6 - FSUOGM Week 49 2022

FSUOGM PIPELINES & TRANSPORT FSUOGM

Oil tanker jam forms off Turkey as Russian

oil price cap disrupts markets

TURKEY AN oil tanker traffic jam has formed off the passing through the strait each year. This typi-
Turkish coast following the EU’s introduction of cally includes over 3% of global oil supply, deliv-
The jam comes after a price cap on global Russian crude supplies, the ered from Russia and the Caspian Sea region.
the EU introduced its oil Financial Times reported on December 5. Turk- The traffic jam is evidence of the market
price cap. ish authorities are demanding new proof of full disruption that has been caused by the oil price
insurance coverage for vessels passing through cap, which was introduced on the same day that
the Bosphorus and Dardanelles straits to and the EU placed an embargo on most Russian
from the Black Sea and Mediterranean. oil import flows to its member states. Russia
The EU, G7 and Australia brought into force warned on December 5 that the cap would dest-
a price cap on Russian seaborne oil exports on abilise global energy markets, but would have no
December 5, prohibiting shipping and insurance impact on its ongoing war in Ukraine
companies from providing services for Russian There could be greater disruption to come,
oil cargoes sold above $60 per barrel. The move as Moscow has said it will ban domestic oil pro-
is designed to put pressure on Moscow to scale ducers from complying with the price cap, and
back its war efforts in Ukraine. The measure is will not sell crude to any countries that abide by
significant, as companies in G7 countries pro- the measure. Russian Deputy Energy Minister
vide insurance services for 90% of the world’s Alexander Novak has said that Russia is pre-
cargo, while the EU hosts many of the world’s pared to scale back oil production if necessary,
major shipping companies. potentially putting further upward pressure on
According to the FT, around 19 oil tankers oil prices. Analysts at Moscow-based brokerage
were waiting in line to transit through Turkish BCS Global Markets warned that the price cap
waters on December 6. Turkish border control could knock out some 0.5mn barrels per day of
was checking the tankers to see if they could Russian oil supply by the end of the year.
present insurance coverage for potential acci- Another factor to watch in the oil market is
dents such as oil spills and collisions. whether or not China will ease its stringent coro-
The Bosphorus is one of the world’s bus- navirus (COVID-19) restrictions, amid wide-
iest shipping routes, with some 48,000 ships scale protests. ™

P6 www. NEWSBASE .com Week 49 12•December•2022