Freight rates for shipments of Russian Urals oil from the Baltic and Black Sea ports to India rose to their highest levels since March 2024 following U.S. sanctions on tankers involved in Moscow’s energy exports, trading and shipping sources as well as Reuters calculations showed.

An expected increase in oil exports from the Russian ports partly due to rising CPC blend loadings has also pushed up demand for tankers, further boosting rates, the sources said.

Freight rates for Urals crude started to rise in January after the U.S. sanctions on 183 tankers. Higher freight costs lead to lower Russian oil sellers’ revenue as they have to pay more for transport.

Costs for routes from Russian Baltic ports – Primorsk and Ust-Luga, and Novorossiisk in the Black Sea to Indian ports rose to at least $8 million for a one-way trip compared to $7.5 million on average in February, the sources said.

That is still much lower than the record of nearly $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.

Early in January, before the latest U.S. sanctions, the cost of a one-way trip for an Aframax tanker from Russia’s Baltic ports to India was about $4.7-4.9 million, while the cost from the Black Sea port of Novorossiisk to India for Suezmax tankers, which can hold 140,000 metric tons, was around $4.3-$4.5 million, shipping data showed.

Growing supply and arbitrage of Kazakh CPC Blend oil to Asia have also prompted an increase in prices in Mediterranean freight markets, as demand rises for the limited number of available tankers.

“Rising CPC Blend exports to Asia (from the Black Sea terminal near Novorossiisk) provide additional support to freight rates, as longer voyages take vessels longer to return to Europe”, a trader involved in the CPC Blend oil market said.

Kazakhstan plans to lift its oil exports via the CPC pipeline by 12% in March from February, according to the energy ministry.
Source: Reuters