Freight rates for tanker shipments of Russia's flagship Urals crude from western ports to India, the grade's main market, have surged in August as strong demand for vessels and mounting security risks linked to carrying Russian oil drove up costs, three trade sources said.
The rise in shipping costs is squeezing revenues of Russian oil exporters already grappling with Western sanctions and a difficult geopolitical environment.
Freight markets have also been supported by disruption to global shipping routes stemming from conflict in the Middle East. Risks are rising for vessels transiting through the Strait of Hormuz, one of the world's most important chokepoints for oil trade.
Freight rates for Suezmax tankers carrying about 140,000 metric tons of crude from the Russian Black Sea port of Novorossiysk to India have climbed to nearly $20 million, the highest level in years, from around $13 million last month, the sources said.
The steep increase reflects growing concerns among ship owners over security risks in the Black Sea, where intensified drone attacks have repeatedly disrupted port operations and damaged vessels.
Oil shipments from Russia's western ports have fallen to about 2.3 million barrels per day in the first half of August, 15% below the initial loading plan, because of disruptions at Novorossiysk.
"The market is extremely tight for Russian Black Sea loadings. Owners are asking for much higher rates to compensate for the risks, and many are still reluctant to take the voyages," one trader said.
Loading operations at Novorossiysk have faced regular interruptions in recent months due to attacks, forcing exporters and traders to seek alternative shipping arrangements.
Despite the record earnings available, many ship owners remain wary of sending vessels to Russian Black Sea ports because of concerns over the safety of crews and ships, industry sources said.
Freight rates have risen sharply on other Russian export routes as well.
According to the sources, the cost of transporting an Aframax cargo of about 100,000 metric tons from the Baltic port of Primorsk to India has increased to around $13 million on average, up from about $8 million in early July.
Traders said demand for tankers in Russia's Baltic ports has strengthened as exporters seek to divert cargoes from vulnerable Novorossiysk to the Baltic, tightening vessel availability and pushing rates higher.
India remains one of the largest buyers of Russian seaborne crude, absorbing a significant share of exports that were redirected from Europe after Western sanctions and embargoes reshaped global oil trade flows following the outbreak of the conflict in Ukraine.
(Reporting by Reuters)
