India faces no immediate impact of oil tanker pileup in Turkey: Officials

An oil tanker pileup off the coast of Turkey is not expected to impact the flow of Russian crude to India for now, senior government officials told ‘Business Standard’ on Thursday.

They said most of the tankers are not headed to India but the situation might become difficult if it persists beyond another week or so. Some 30 oil tankers have jammed up in front of Turkey’s Bosphorus Strait as Ankara’s demands insurance papers from them: an effect of the G7’s sanctions against Russian seaborne crude that went into effect this week.

“The situation is not detrimental to the flow of Russian crude currently. We are keeping a tab on it,” an official said.

International media reported on Thursday the ships held up in Turkish waters are mostly carrying crude designated for Turkey, Italy and Greece. Some ships were also headed for India and China, said officials.

The Indian government has been monitoring the situation since Tuesday, diplomatic channels have not yet been engaged, they said.

G7 nations begin implementing from December 5 a $60 per barrel price cap on seaborne crude oil. Russia and major buyers of its crude, such as India and China, can continue to trade in Russian oil at prices higher than the cap, but services such as insurance for freighters carrying the oil, or vessel clearances will not be available from Western nations.

The price cap will not apply to oil purchased above the price cap, but loaded onto vessels before December 5 and unloaded before January 19 next year. “All of the vessels currently in transit in that area (Turkey) took on their shipments earlier than that date,” said another Indian official.

Logistical challenge

Senior American officials have said New Delhi may continue buying oil from Russia as long as it does not use Western financial services like insurance, banking and most importantly shipping.

Earlier this week officials had told ‘Business Standard‘ that New Delhi has been assured it will continue to receive the existing deep discounts on Russian oil for the time being.

However, both official and industry estimates show most of the ships carrying crude oil to India from Russia, generally use insurance services of companies based in West Europe and the United States.

India’s share of Russian crude was just 0.2 per cent of the total crude oil import prior to the Kremlin’s invasion of Ukraine in February. It increased to a record 24.8 percent in the April-September period, according to Commerce Department data.

In October, India imported 9,36,556 barrels per day (bpd) from Russia, estimates made by London-based commodity data analytics provider Vortexa, which tracks ship movements to estimate imports, shows.

This represents the highest ever volume of oil imported from Russia, and a steep jump from December, 2021 when imports stood at only 36,255 bpd.