One of the fun things about the pandemic era we're living in is the way things tend to repeat in cycles — a variant emerges, we avoid indoor gatherings, some weeks pass, and we reemerge. Supply chains break down, then rebuild, then a war starts it all falls apart again. Jobs are lost, jobs come roaring back, jobs go away again. (To be clear, when I say "fun," I mean god-awful.)
Here's the latest deja vu moment on my radar: A shipping bottleneck is forming in waterways around Turkey, with a couple dozen oil tankers stuck waiting to make their way through. *Cue flashbacks of 2021's Great Suez Ever Given Debacle...
This time, the shipping snag is threatening global oil supplies at a particularly fragile moment, my colleague Hanna Ziady writes.
What's the holdup?
It has to do with the price cap that the US, Europe and allies imposed on Russian oil on Monday (more on that in a minute).
As of Thursday, there were at least 16 oil tankers in the Black Sea waiting to cross the Bosphorus Strait into the Sea of Marmara, up from just five on Tuesday, according to the Istanbul-based Tribeca Shipping Agency. Another nine were waiting to cross southbound from the Sea of Marmara through the Dardanelles Strait into the Mediterranean.
Turkish maritime authorities are concerned about the risk of accidents or oil spills involving uninsured vessels, and are preventing ships from passing through Turkish waters unless they can provide additional guarantees that their transit is covered.
UK and US officials were in talks with Turkish authorities to resolve the impasse.
So, the price cap…
It's the latest and possibly strongest sanction against Russia since the war in Ukraine began 10 months ago.
The way it works is, it compels the majority of companies involved in financing, insuring and brokering the ships that carry Russian oil to do so only if the oil is being sold for $60 a barrel or less (which is below the market value). The idea is to keep the global oil supply moving while eating into the revenues Russia can tap to finance the war. If, say, India were to try to pay market price for Russian oil, it basically wouldn't be able to secure insurance for the ship, which is vital.
But in the run-up to the price cap being implemented, Turkey threw a wrench into the works, demanding that insurance providers — most of which are British or European — cover ships passing through Turkish waters with an extra cover known as "protection and indemnity" insurance. The International Group of P&I Clubs, which provides protection and indemnity insurance for 90% of the goods shipped by sea, says it cannot comply with the Turkish policy.
The Turkish government's requirements "go well beyond the general information that is contained in a normal confirmation of entry letter" and would require P&I Clubs to confirm coverage even in the event of a breach of sanctions, the UK P&I Club said in a statement.
Bottom line: Although the logjam hasn't yet disrupted energy supplies, analysts say it needs to be resolved quickly. The two straits are popular routes for global trade, especially (but not exclusively) for crude oil.
Comments
Post a Comment