Page 8 - FSUOGM Week 49 2022

FSUOGM POLICY FSUOGM

Fallout continues from Russian

oil price cap

RUSSIA FALLOUT from the EU and G7’s introduction potential accidents such as oil spills and colli-
of a cap on Russian oil prices continues, with sions.
Tankers are around a fifth of Cyprus’ fleet by tonnage re-reg- However, a report by Reuters on December 6
deregistering from istering since early October, potentially to avoid cited an official with the G7 group as saying that
Cyprus, and Russia is having to comply with the measure. all but one of those 20 tankers were carrying oil
looking at options to Citing Cypriot Shipping Minister Vasilis of Kazakh, rather than Russian origin, and were
respond to the price Demetriades, the Cyprus Mail reported on therefore not subject to the cap.
cap. December 6 that approximately 20% of the oil “There should be no change in the status of
tanker fleet registered in Cyprus had migrated to their insurance from Kazakh shipments in pre-
other registers over the past two months. The EU, vious weeks or months,” the official said, sug-
the G7 and Australia introduced a Russian oil gesting that the blockages in the Bosphorus and
price cap on December 5 prohibiting companies Dardanelles straits linking Black Sea and Medi-
within their jurisdiction from providing services terranean were the result of Turkish policy rather
for the sale of Russian oil cargoes sold above $60 than the price cap.
per barrel. Many of the largest global shipping, "The price cap policy does not require ships to
insurance and reinsurance companies are based seek unique insurance guarantees for each indi-
in EU or G7 nations, including in Cyprus. vidual voyage, as required under Turkey's rule,"
“Approximately 20% of the oil tanker fleet the official said. "These disruptions are the result
registered in Cyprus have migrated to other of Turkey's rule, not the price cap policy."
registries since October 6, when the European The two Turkish straits are used for shipping
Commission signalled its intention to cap the significant volumes of oil from Caspian region
price of Russian seaborne oil,” the Cyprus Mail producers, including Kazakhstan.
reported, citing Demetriades.
Oil tankers usually account for around 10% The Russian response
of the ships by tonnage listed on the Cypriot Russia’s government has said before that it will
registry, according to the newspaper. Cyprus refuse to comply with the price cap. According
has asked the European Commission for com- to a new report by the Moscow-based Vedo-
pensation for the lost shipping business. Other mosti newspaper, Moscow is looking at three
EU countries including Greece and Malta have possible responses to the restriction.
taken a bigger hit in terms of tanker flight, the The government may impose a ban on the
minister said. No reports have emerged showing sale of oil to countries that have introduced the
the extent of that impact, however. price ceiling, including indirect sales through
intermediary countries. It is also considering a
Turkish traffic jam ban on the sale of oil cargoes under contracts
The Financial Times reported on December 5 that include the price ceiling as a term, regard-
that an oil tanker traffic jam had formed off the less of which country receives them. It might
Turkish coast following the introduction of the also impose a maximum discount that Russia’s
price cap, as well as a coinciding EU embargo flagship Urals oil blend can be sold at compared
on most Russian oil imports. According to the with Brent. If the discount surpasses the set level,
newspaper, around 20 oil tankers were waiting the sale is prohibited.
in line to transit through Turkish waters. Turk- None of the options have been approved yet,
ish border control was checking the tankers to Vedomosti reported, and more than one could
see if they could present insurance coverage for be adopted. ™

P8 www. NEWSBASE .com Week 49 12•December•2022