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Oil tanker traffic jam threatens diplomatic row with Turkey

Oil product tanker Lila Fujairah sails in the Bosphorus, on its way to the Mediterranean Sea - YORUK ISIK/REUTERS
Oil product tanker Lila Fujairah sails in the Bosphorus, on its way to the Mediterranean Sea - YORUK ISIK/REUTERS

British officials were locked in talks with counterparts in Ankara on Tuesday as a traffic jam of Western oil tankers stuck in Turkish waters threatened to escalate into a diplomatic row.

Demands for additional paperwork from vessels have left nearly two dozen crude oil tankers stuck in the region. All are seeking passage to Russia’s Black Sea ports via the Turkish Straits.

Ships have been held up by demands for extra paperwork that shows insurers are covering the vessel. Authorities are demanding the additional documentation after the imposition of a Western cap on Russian oil on Monday.

A $60 per barrel price cap imposed by the G7, Australia and the EU on Russian seaborne crude oil marks the latest measures to punish Moscow over its invasion of Ukraine.

Since the price cap came in, Ankara has asked ships for additional paperwork in order to secure passage through its waters.

It is understood that Turkish officials have accepted letters of confirmation from Russian insurers, but it is tankers with cover from Western insurers that are being held up.

Representatives of the industry in London said Turkey’s demands were excessive and amounted to demands that insurers agree to cover sanctions breaking.

The blockage risks developing into a diplomatic spat between Turkey and its western allies. The backdrop is continued close relations between Turkish president Recep Tayyip Erdogan and the Kremlin despite the conflict in Ukraine.

Ankara has kept channels of communication with Vladimir Putin open since the war and brokered a deal between Ukraine, Russia and the UN to unblock grain shipments from Black Sea ports.

One geopolitical analyst said Turkey appeared to be “playing a clever game as they balance between Russia and their western allies”.

A Treasury spokesman said: “The UK, US and EU are working closely with the Turkish government and the shipping and insurance industries to clarify the implementation of the Oil Price Cap and reach a resolution.

“There is no reason for ships to be denied access to the Bosporus Straits for environmental or health and safety concerns.”

Millions of barrels of oil per day move south from Russian ports through Turkey's Bosphorus and Dardanelles straits into the Mediterranean.

Turkish maritime authorities issued a notice last month asking for additional guarantees from insurers to ensure that the transit through the Bosphorus would be covered starting from December 2.

Officials have said that tankers must provide letters from their protection and indemnity providers, known as P&I Clubs, confirming that insurance cover would remain in place to cover incidents such as oil spills and collisions.

The London P&I Club said: “The International Group has assessed this issue in detail and, at the time of writing, it has been agreed that Clubs cannot and should not issue such a letter to their Owner or Charterer members.

“The Turkish Government’s requirements go well beyond the general information that is contained in a confirmation of entry letter. It requires a P&I Club to confirm that cover will not be prejudiced under any circumstances, including where there is a sanctions breach on the part of the assured, whether knowingly and intentionally or unknowingly and unintentionally.

“Issuing a confirmatory letter under these circumstances would expose the Club to a breach of sanctions under EU, UK and US law and as such the Clubs cannot comply with the Turkish Authority’s request.”

In October, Mr Putin suggested he could make Turkey an international gas hub by redirecting energy deliveries away from the EU in a sign of warm ties between the two nations.

He said: “Turkey has turned out to be the most reliable route for deliveries today, even to Europe. We could consider the possibility of creating a gas hub in Turkey for supplies to other countries.”

A spokesman for Lloyd’s of London, the world’s largest insurance market, said: “Lloyd’s welcomes the G7’s efforts to build consensus on this issue and we will work to support all measures that the UK government are putting into place as a result.”