Freight rates for tanker shipments of Russia's Urals crude from western ports to India have fallen in July from the previous month as summer season and increased vessel availability eased pressure on the market, according to three trading sources.
Lower transportation costs offer some relief to Russian oil exporters, whose margins have come under pressure from wider discounts for Urals crude amid weak demand in Asia and ample supplies of competing grades.
According to the sources, the cost of shipping an Aframax cargo of around 100,000 metric tons from the Baltic port of Primorsk to India has fallen to about $7 million to $8 million, from $10 million to $11 million in June.
Freight rates for Suezmax tankers carrying around 140,000 tons of crude from the Black Sea port of Novorossiisk to India have declined to roughly $10 million from about $15 million last month, the sources said.
Market participants attributed the decline to weaker seasonal demand and greater availability of vessels after freight markets tightened earlier this year.
The United States and Iran have resumed attacks in recent days, renewing concerns over shipping through the Strait of Hormuz, a key route for global oil exports.
Following the outbreak of the U.S.-Iran conflict in the spring, disruption to traffic through the strait triggered a sharp increase in tanker rates worldwide, raising transportation costs for Russian crude suppliers as well.
Traders said freight rates could rise again if shipping through the Strait of Hormuz is disrupted once more. Russia's oil exports remain near record levels, supporting demand for tankers and potentially adding upward pressure to freight costs.
(Reuters)