The cost of shipping Russian oil by sea from Black Sea ports continues to rise.
Between 31 August and 6 September, freight rates for Aframax tankers sailing from Novorossiysk to western India increased by 2.7% to $23.2 per barrel, while rates to northern China rose by 3.1% to $25.7 per barrel. Shipping costs to Turkey increased by 2.2% to $12.8 per barrel.
Some shipments from the Azov-Black Sea basin are being redirected to Russia’s northwestern ports, increasing pressure on the Baltic route. Freight rates from Baltic ports to eastern India rose by 3.7% over the week to $17.2 per barrel.
One of the factors driving up costs is the increased risk to shipping. Some shipowners are avoiding calls at Novorossiysk, reducing the number of tankers available to transport Russian oil. In early September, a tanker voyage carrying Urals crude from Novorossiysk to India cost between $18 million and $20 million.
Insurance costs have also increased. Due to war-related and operational risks in the Black Sea, shipowners are raising insurance premiums and incorporating these additional costs into freight rates.
The available tanker fleet is also shrinking. Some vessels have shifted to Middle Eastern routes, where carriers can earn higher rates because of the risks associated with transiting the Strait of Hormuz. At the same time, the number of tankers available in September to load Urals crude at Russia’s northwestern ports remains limited.
Russia is therefore being forced to pay more to deliver oil to its main buyers. High freight costs absorb part of its export revenues and give India and China additional leverage to demand lower prices, effectively shifting logistics and insurance risks onto Russian suppliers.
Higher transportation and insurance costs are also expected to further reduce Russia’s tax revenues. Delays in shipments could increase oil inventories at Russian storage facilities and force companies to cut production.
