US sanctions cause 25 per cent spike in Russian oil freight rates to India
Freight rates for shipments of Russian oil from its western ports to India rose by 25 per cent after the US imposed sanctions on 183 vessels involved in Moscow's energy exports a week ago, three trading sources said and Reuters calculations showed.
India, which is Russia's biggest market for oil, and China are still buying Russian barrels using Washington's wind down period until March, while assessing new risks, traders said.
The cost of a voyage for an Aframax vessel from Russia's Baltic ports to India rose to $6.0-6.3 million for a one-way trip, from about $4.7-4.9 million a week ago, the sources said.
That is still much lower than $20 million per voyage in 2022 after the West imposed the first sanctions on Russia's oil sector, including a price cap and a European Union oil embargo.
The cost from the Black Sea port of Novorossiisk to India for Suezmax tankers, which can hold 140,000 metric tons, rose to around $5.5 million for a one-way trip from $4.3-$4.5 million over the same period, the sources added.
Russian oil suppliers are mostly using Russian ships or the so-called shadow fleet of older vessels working under non-Western flags and using non-Western insurance.
In addition to the increase in freight rates, daily demurrage costs - the penalty for delayed vessels - rose to $80,000-90,000 per day, compared to $55,000-$60,000 last week, data seen by traders showed.
Under the price cap imposed in 2022, suppliers of Russian oil are only able to use Western services such as shipping and insurance if Russian crude trades below $60 per barrel.
Many Russian exporters have been using Russian insurers such as Ingosstrakh and Alphastrakhovanie, both of which were also sanctioned by the US a week ago.
Traders expect the latest US sanctions on the insurers and on the 183 tankers to prompt Russian oil firms to cut prices to below $60 per barrel, making it possible to use Western shipping and insurance services.
(Reporting by Reuters; Editing by Alexander Smith)
