Oil tanker jam in Bosphorus grows as sanctions snarl insurance

A backlog of oil tankers at the Turkish straits continues to build up, as negotiations failed to produce a solution to an insurance glitch caused by sanctions on Russian crude.

Twenty six tankers holding more than 23 million barrels of oil from Kazakhstan are currently unable to pass the Bosphorus and Dardanelles straits, vital chokepoints for the flow of crude and other commodities from the Black Sea.

Late last month, Turkish authorities announced that passing tankers would have to provide letters from their insurers proving they were covered to navigate the straits. The move was in response to European Union sanctions against Russia that bar insurance of vessels if the oil they’re carrying costs above $60 a barrel.

US and UK officials are pushing for Turkey to reconsider the proof-of-insurance requirement, especially given that cargoes from Kazakhstan are not subject to sanctions. So far they’ve been unsuccessful.

The US is confident the price-cap restrictions don’t prevent insurers from responding to environmental or safety-related emergencies, a US Treasury official said.

For insurers, issuing the documentary evidence is both an extra piece of bureaucracy, but it also sets a potential precedent that other locations might seek to follow.

Tankers often end up waiting a several days at the straits at this time of year anyway because of shortened daylight hours for transit and bad weather. However, a local port agent report showed that the tankers in question still need to provide proof of insurance.