March 24, 2023

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Oil price ceiling causes ‘traffic jam’ of ships in Black Sea

After European union And the G7 nations approved a cap on spending on oil prices — US$60 — as officials began to worry about shipping congestion on one of the main trade routes for the product from Asia to Europe.

On Thursday, 8, 16 tankers traveling south from the Black Sea were waiting to cross the Bosphorus Strait and enter the Sea of ​​Marmara, Tuesday to five, according to a report by the Istanbul-based Tribeca Shipping Agency.

If the congestion is not resolved, global supply could fall and prices could rise, meaning that imposing this embargo on Russia would have the opposite effect of what the G7 and EU had planned. In addition to trying to lower the cost of production globally, both groups wanted to reduce Russia’s profits to invest in an invasion of Ukraine — a major exporter of oil.

In addition to the 16 oil tankers stranded in the Black Sea, nine more were waiting to cross the Sea of ​​Marmara and head south through the Dardanelles to the Mediterranean.

Amid chaos in Turkey’s waterways, the US and UK governments have opened talks with the Turkish government to resolve the growing impasse, as Turkey insists that ships must prove they have insurance to cover the new barriers before they are allowed to pass through the connecting straits. Black Sea and Mediterranean.

“The UK, US and EU are working closely with the Turkish government and the transport and insurance sectors to clarify the implementation of the oil price ceiling and reach a solution,” the UK’s Treasury said in a statement.

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Although there is no shortage yet, there may be problems in the short and medium term. “It is a very popular route around the world for global trade and especially for oil,” he said CNN George Lyon is senior vice president of oil market analysis at Rystad Energy.

Countries like Russia, Kazakhstan and Azerbaijan use the Turkish Straits to bring their oil to global oil markets.

The Turkish Maritime Authority said in a statement that “most of the tankers waiting to cross the strait are EU vessels and most of the fuel is destined for EU ports”.