Break Wave Advisors reports that the global shipping market is closing 2025 under a heavy mix of geopolitical strain, shifting trade flows, and regulatory tightening. Although supply and demand remain central to freight pricing, sanctions and rerouted commodities continue to distort the market. As new diplomatic signals emerge, analysts are now asking whether the industry is entering the final phase of the current geopolitical cycle and how freight markets might respond when wartime disruptions eventually ease.
Diplomacy Intensifies as Moscow Gains More Attention
Discussions linked to the Russia–Ukraine conflict continued to draw increased attention this week. Reports suggest that diplomatic outreach may expand further, prompting markets to reassess how a potential framework—even an early or limited one—could influence maritime trade.
Because of this, operators are watching the timing closely. They want to understand how fast shipping patterns might shift if geopolitical pressure begins to soften. Many expect that any early signs of stabilisation could reshape global trade flows well before formal agreements take effect.
Russia’s Export Economics Tighten as Coal Drives Revenue Decline
New trade data reviewed by Allied Quantumsea Research shows a clear drop in Russia’s fossil fuel export revenue. In October, total daily earnings fell 4% month-on-month to EUR 524 million, the lowest point since the start of the conflict. Coal was the primary driver. Revenue from this segment fell 10% despite a 14% rise in export volumes.
This marks the first revenue contraction in six months. It also highlights the growing gap between increasing shipments and falling prices as sanctions tighten Russia’s ability to monetise its energy exports.
Other energy segments delivered mixed results. Crude revenue held steady at EUR 238 million per day. LNG posted the strongest growth, rising 10% as export volumes climbed nearly 30%. Pipeline gas revenue slipped 6%, and seaborne oil products fell 11%. Yet none of these declines matched the severity of the drop in coal income, which remains the largest contributor to the overall downturn.
China and India Remain Key Buyers but Show Early Adjustments
China remained Russia’s largest fossil fuel customer in October, accounting for 44% of total revenue. Crude dominated these imports, with coal, gas, and LNG also contributing. Seaborne crude shipments into China increased 21% every month.
However, market observers note early signs of adjustment as some export streams linked to major suppliers slow ahead of expected U.S. sanctions.
India followed as the second-largest buyer, taking EUR 3.1 billion in October. Most of this volume came from crude imports, which rose 11% month-on-month. Refiners increased their intake, lifting throughput while adjusting to shifting product demand. Although imports increased, exports fell sharply year-over-year, hinting that sanctions continue to influence downstream flows.
Price Cap Dynamics: Urals Trades Above the Limit
Urals crude averaged USD 59 per barrel in October. Although this figure sits 4% below the previous month, it still exceeds the official price cap. The discount to Brent narrowed to less than USD 5 per barrel. Because of this tighter spread—and the rising compliance exposure—buyers may soon reassess how much risk they are willing to take when sourcing Russian barrels.
Tanker Participation Shifts as More G7-Aligned Tonnage Returns
G7-aligned tankers continued to increase their participation in Russia’s seaborne crude flows during October, accounting for 38% of shipments. Shadow-fleet units still carried the largest share at 44%, while other non-G7 vessels moved the remaining volumes.
The trend became even more visible in oil products, where G7-aligned tankers carried nearly four-fifths of all shipments.
A total of 360 tankers participated in these trades, including more than 100 shadow-fleet units. Many of these vessels are older and lightly insured, which raises substantial operational and environmental concerns. In the event of a coastal incident, cleanup and compensation costs could exceed EUR 1 billion. As enforcement tightens, coastal states are becoming increasingly aware of the financial risks created by ageing, non-compliant tonnage.
What a 2026 Peace Scenario Could Mean for Freight Markets
If a peace agreement materialises, 2026 could mark the beginning of a major rebalancing for the global shipping market.
Trade flows may return to more traditional patterns, reducing the extended tonne-mile demand that has supported long-haul crude movements since 2022. This shift would likely benefit the Suezmax and Aframax sectors while easing pressure on VLCC utilisation.
A recovery in Ukrainian grain exports would also boost demand for Supramax and Handysize tonnage. At the same time, improved agricultural trade relations between the United States and China could restore stability to bulk commodity flows.
In such a scenario, 2026 would not extend the crisis-driven market conditions of recent years. Instead, it could usher in a more balanced freight environment where fundamentals—not disruptions—guide global maritime trade.
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Source: Break Wave Advisors
