Insurers raise prices for ships in Russia’s Black Sea ports – Reuters

Insurance companies have told ship charterers operating in Russia’s Black Sea ports of increased additional payments, known as “risk premiums for operating in a military conflict zone.” This was reported by Reuters.

Last year, after the start of the Russian invasion of Ukraine, a surcharge was added to the total cost of tanker insurance in the form of a premium for the risk of working in a military conflict zone.

Battles over the waters of Russian and Ukrainian Black Sea ports escalated after a grain export deal broke down in mid-July.

The war risk premium has been increased from 1% of the cargo value to 1.20-1.25%, traders said.

The cost increase means that each flight costs $200,000 more per Suezmax tanker (capable of carrying 120,000 – 200,000 tons) if Russian oil is shipped to India. The increase in “premium” means that the total amount of “premium” will be about $1 million.

Although this amount is small, it adds to Russia’s total spending on oil exports, which has increased since February 2022 due to sanctions.

At the height of the Russian supply crisis and sanctions, Russian companies paid up to $20 million per tanker to insure shipping and freight costs, more than a third of the cost of each shipment.

Traders added that the increase in value was mainly related to cargoes carrying oil and Russian products. “Volumes coming from Russia are associated with higher risks than others, although the current situation gives insurers many reasons to increase prices for those working in Russia’s Black Sea ports ,” said one of the traders.

Grain traders are expressing concerns about the security of grain supplies, and the increase in the war risk premium for oil tankers suggests that concerns have spread to broader markets.

Total crude oil shipments from the Black Sea Novorossiysk and the CPC terminal account for approximately 2% of world supplies. The export of oil products from Russian Black Sea ports is about 4 million tons per year.

Traders added that the increase mainly applies to cargo carrying oil and Russian products.

Recall that on July 17, Russia announced its withdrawal from the grain agreement, which was implemented for a year and allowed the export of Ukrainian food from Black Sea ports. Now the Russian Federation attacks the south of Ukraine almost every night and destroys the port infrastructure involved in the grain deal.