Geopolitical instability related to Russia’s invasion of Ukraine and rising bunker prices caused petroleum tanker rates for routes originating in Europe to rise to record highs in April 2022, according to the US Energy Information Administration (EIA).
Rates for dirty tankers
Rates for dirty tankers – those that mostly carry crude oil, but also haul high-sulphur petroleum products such as residual fuel oil – for Aframax-sized vessels originating in the Black Sea in southeast Europe increased to $32.10 per metric tonne (mt) in April 2022, more than triple the $10.11/mt price in January 2022. The tanker rates for routes originating in the Baltic Sea in northern Europe reached $41.38/mt in April 2022, up from $7.50/mt in January 2022.
The high-cost tanker rates in the Black Sea include higher insurance risk premiums because the sea borders Ukraine and Russia.
‘One cause for the high Aframax rates at Russia’s Baltic Sea port, Primorsk, could be higher demand for the smaller Aframax ships on routes traveling from Russian ports to China,’ EIA said. ‘Normally, very large crude carriers (VLCCs) transport Russia’s Ural crude oil to China.’
Russian sanctions force oil buyers to get crude from other markets
Because fewer Aframax ships are available globally, the dirty tanker rate for the Baltic-UK Continent (UKC) route increased from $8.53/mt in January 2022 to $41.38/mt in April 2022. Sanctions on Russia’s energy and maritime shipping sectors, noted EIA, have caused crude oil buyers in Europe to purchase their crude oil imports from other markets.
Weekly US crude oil exports have been above the five-year range since the week of April 15.
EIA also highlighted increased bunker fuel costs, which affect both dirty and clean tanker – those that carry lower-sulphur petroleum products, including refined petroleum products such as motor gasoline, diesel fuel, jet fuel, and naphtha – rates.
‘Between January and April 2022, bunker fuel prices for high- sulphur fuel oil (HSFO) increased by 28%, and prices for very-low sulphur fuel oil (VLSFO) increased by 33%,’ EIA said, adding, ‘the current price premium of VLSFO over HSFO increased to $276/mt in March 2022—the highest monthly spread since IMO 2020 was implemented in January 2020.’
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Source: US EIA
