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Heightened shipping threats from Ukrainian attacks and a shortage of tankers have pushed the freight costs for Russia’s crude oil exports from the Black Sea to record highs.
In the week to September 6, the key tanker rate for shipping crude oil on an Aframax from the Black Sea port of Novorossiysk to West India and North China rose for the seventh straight week, by 2.7% and 3.1% from the week prior, respectively, Russian daily Kommersant reported on Monday, citing local pricing indexes.
The cost to ship crude to India is now $23.20 per barrel while the freight costs from Novorossiysk to China is $25.70 a barrel, according to the latest price reporting week.
These are the highest export costs for Russia’s oil from the Black Sea to Asia ever, analysts say, after a seven-week-long rally in freight costs.
The higher shipping risks and insurance costs, as well as lower tanker availability for the routes out of Novorossiysk, have been pushing shipping costs higher in recent months, analysts tell Kommersant.
A lot of tankers have moved or are tied up on lengthier journeys in the Middle East, while the Baltic Sea also sees a shortage of vessels to ship Russia’s flagship Urals grade from Russia’s northwestern Baltic ports.
As a result, the price of shipping crude out of the Black Sea has soared.
Yet, profits are still being made amid the rally in international crude oil prices.
Over the past year, Ukraine has targeted and hit Russia’s key Black Sea oil port Novorossiysk multiple times as it aims to stifle Russian oil exports and revenues for the Kremlin.
Some of the attacks have caused damages that necessitated temporary suspension of oil loadings at Novorossiysk and the nearby export terminal of the Caspian Pipeline Consortium (CPC), which loads oil from Kazakhstan for exports from the Black Sea.
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