- Shipping Costs Fall to $5.5–$5.7 Million from Baltic Ports.
- Urals Crude Stays Below $60 Cap, Attracting Western Shipowners.
- EU Proposes New Sanctions, Eyes $45 Oil Price Cap.
Freight rates for shipping Russian crude oil from Baltic ports to India saw a decline between late May and early June, thanks to an increase in the number of available tankers. The rates fell to around $5.5–$5.7 million for a one-way shipment, down from an average of $6 million during April and May, and about $8 million in early March, reports Reuters.
Western Shipowners Re-Enter Market as Prices Fall Below Cap
The uptick in tanker availability is mainly due to the price of Russia’s Urals crude dipping below the $60 per barrel cap, which has opened the door for Western shipping companies, particularly those from Greece, to re-enter the Russian oil market. As of Wednesday, Urals crude loaded from the Primorsk port was priced at roughly $54.72 per barrel.
EU Proposes Lower Price Cap on Russian Oil
Even with the drop in freight rates, things could change if the European Union goes ahead with its newly proposed sanctions. The EU is looking to lower the Group of Seven (G7) price cap on Russian crude from $60 to $45 per barrel. This cap, which was put in place in late 2022, limits access to Western maritime and insurance services for any Russian oil sold above that price.
Rates Still Higher Than January Levels
While rates have decreased in recent months, they are still higher than what we saw at the beginning of the year. Back in January, the cost to ship Russian crude from Baltic ports to India was between $4.7 million and $4.9 million for a one-way shipment.
Sanctions in January Drove Initial Spike
Freight rates surged after a new wave of U.S. sanctions aimed at Russian energy interests kicked in January, pushing Russian oil exporters to look for alternative tankers to replace those impacted by the restrictions.
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Source: Reuters
