Shippers of oil to cross the Bosporus and Dardanelles will need to prove the availability of insurance, Bloomberg reports, citing the country’s transport ministry. This measure could limit the flow of Russian oil when new European sanctions come into force, the agency notes.
The new rule, which Turkey has warned global oil shippers about, comes into effect on Dec. 1, days before the European Union and the UK impose further restrictions on trade with Russia.
So, from December 5, the EU and the UK prohibit their companies from providing transportation services, as well as insurance and financial services, if the price of Russian oil sold is above a certain ceiling, which has not yet been established.
With insurance covering everything from oil spills to collisions, Turkey is essentially looking to protect its waters, but it could also affect the flow of millions of barrels of oil exported from Russia, Bloomberg notes.
Ships carrying oil across the straits will be required to provide a letter from their insurance company stating that insurance will be provided for that particular voyage and cargo, according to a Turkish Ministry of Transport circular.
The circular also notes that if ships pass through the straits uninsured, significant damage could be caused to waterways and traffic could be stopped if an uninsured ship were involved in an accident.
Over 90% of the global tanker insurance market is accounted for by the association of insurance companies International Group of P&I Clubs, which is subject to European law.