Russia continues to finance its war against Ukraine with profits from the sale of raw materials. This includes oil. For this reason, the European Union (EU) and leading Western industrialized countries (G7) have decided on the so-called oil price cap of $60 per barrel of crude oil for Russia. In addition, an oil embargo is gradually being imposed. This will not completely stop the energy supply, which is still necessary in some cases, but it will reduce Russia’s revenues.
How can this be implemented? When it comes to shipping, European freight forwarders are only allowed to accept cargo from third countries such as China and India if the price is not higher than the cap. This also applies to insurers, reinsurers or other financing of the oil business. It works: shipping companies from the EU operate more than half of all tankers worldwide, the most important insurance companies come from the G7 countries.
Oil tankers stranded
This leads to initial consequences for shipping companies. At least 20 oil tankers with around 18 million barrels of crude oil on board were stranded in Turkish waters, Reuters agency reported. These should go from the Black Sea ports of Russia to the Mediterranean via the Turkish Straits of Istanbul and the Dardanelles. You must first take out new insurance under the new price ceilings. Turkey will not allow the passage of ships without valid, new insurance documents.
More delays are expected in the coming days. The average waiting time for transit from the Bosphorus to the Mediterranean is currently four days for vessels longer than 200 meters.
The cargo of 20 tankers is going to multiple destinations. from South Korea and India to Panama; but mostly for Europe. Second, it banned the purchase of almost all Russian crude oil by sea, but allowed the import of Kazakh oil shipped from a terminal on Russia’s Black Sea coast.