- Baltic crude exports are under pressure following Ukrainian drone strikes, while Black Sea volumes are rising as Russia reconfigures flows through Novorossiysk.
- Freight markets are experiencing strong upward momentum, led by VLCCs in the Middle East Gulf–China trade, with Suezmax and Aframax segments also showing volatility.
- Tight vessel supply, shifting trade routes, and steady demand are reinforcing bullish sentiment despite regional disruptions.
Russian crude exports from the Baltic Sea are facing volatility after Ukrainian drone strikes on terminals and pipelines disrupted operations at Primorsk and Ust-Luga. Together, these two ports handle nearly all shipments from the region, with Primorsk accounting for 55% and Ust-Luga 44%. The majority of cargoes are carried on Aframax (74%) and Suezmax (26%) tankers, destined primarily for India (73%) and Turkey (19%), which together absorb over 90% of exports, according to Breakwave Advisors LLC.
Signs of decline are already visible: during the first 20 days of September, exports reached 25 million barrels, matching last year’s pace but down around 6 million barrels from the August peak of 31 million. This sharp drop highlights the fragility of Baltic crude flows under ongoing geopolitical shocks.
Black Sea Reconfiguration
In contrast, Black Sea exports are increasing as Russia adapts its logistics. Flows through Novorossiysk surged in September, with the 7-day moving average nearing 3 million barrels per day equivalent. The Sheskharis terminal handled nearly 70% of shipments, with Novorossiysk taking another 25%. India remains the top buyer at 48%, followed by Romania, Turkey, and Italy, reflecting Moscow’s strategy to sustain market access despite Baltic disruptions. September exports from Novorossiysk were revised upward, supported by producers like Novatek diverting volumes southward after Ust-Luga damage. This reinforces the Black Sea’s pivotal role in maintaining Russian seaborne exports.
Freight Market Momentum
Freight rates strengthened across tanker segments in September. VLCC rates on the Middle East Gulf–China route exceeded WS100, a 90% monthly rise, echoing the surge seen in September 2022. The increase is linked to fewer available vessels in the Arabian Gulf, with Ras Tanura’s VLCC count falling to a year-low of 85 by mid-September, fueling bullish sentiment. Suezmax rates on the Black Sea–Mediterranean route climbed 36% quarter-on-quarter to around WS140, while West Africa–UKC rose to WS115, a 27% quarterly gain. Aframax rates in the Mediterranean rebounded to WS140, up 40 points week-on-week, though East Mediterranean Aframax earnings remain subdued due to weak demand despite reduced vessel supply. Meanwhile, the US Gulf–Mediterranean route softened after a mid-September spike, settling near WS150. On the Sikka–Japan route, freight rates slipped to WS170 from over WS250 in mid-June, though they still showed a 10% quarterly increase.
Market Balance and Demand Signals
Despite a fall in dirty tonne-days for the AG–China trade, the tightening tonnage list has kept freight rates elevated. In the Black Sea, Suezmax supply rose through September, but steady cargo volumes above the 1.6 million mt mark absorbed additional tonnage, preventing a correction. Overall, firm demand and constrained vessel availability are sustaining a bullish freight market outlook.
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Source: Breakwave Advisors LLC
