The coverage requirement started this week following the EU embargo on seaborne Russian oil imports.
Starting this week, Turkey is now requiring oil tankers traveling through the Turkish Straits to be covered by protection and indemnity insurance, in a move following the start of the European Union’s embargo on Russian oil imports by sea.
The EU also established price caps on Russian oil products alongside the start of the embargo.
Not unlike the Russian crude price cap of $60 per barrel already in place, a price cap on oil products will make it possible for buyers to purchase Western protection and indemnity insurance (P&I) for crude tankers that must travel the Turkish Straits provided they adhere to purchasing the oil products at or below the established price caps.
Turkey has already been requiring P&I coverage for all crude oil takers traveling through the Russian Straits. This led to substantial delays in the narrow waterway in early December when the EU initially banned crude imports from Russia. The ban was implemented on December 5, but the coverage requirements started on December 1.
Proof of coverage was required on all oil tankers making their way through the Bosphorus and Dardanelles Straits, within Turkey’s territorial waters. The new regulation left dozens of tankers waiting for their turn to make their way through the straits, which are the primary waterways connecting the Mediterranean to the Black Sea. The traffic jam took about 10 days to ease once an agreement was established between insurers and the Turkish government regarding new proof of insurance documentation regulations.
Now, new proof of protection and indemnity insurance is required by Turkey based on updated regulations.
Turkey’s general directorate of maritime affairs released a media statement at the end of last week, stating that Turkey had updated its proof of coverage requirements for tankers carrying oil products in order to align with the new EU ban.
The protection and indemnity insurance update was established while the EU’s negotiations over its price cap for Russian diesel and other oil products was still begin negotiated. There was considerable debate in the EU over the limit and the impact it could have on global supply once the overall ban was to be put into place.