US sanctions against Russia have hit oil shipping rates

Oil-related shipping costs rose last week after the United States announced tougher sanctions to drain Russia of its war treasure, posing significant threats to Moscow’s maritime distribution chains.

On January 10, the US Treasury Department announced New measures to deplete Russia’s energy revenues, including sanctions against major producers Gazprom Neft and Surgutneftegas, as well as 183 vessels “mainly oil tankers that are part of the shadow fleet and oil tankers belonging to fleet operators based in Russia.”

The Treasury added that several of the designated tankers carried both Russian and Iranian oil and extended sanctions against Russia-based marine insurance companies Ingosstrax Insurance Company and AlfaStrakhovanie Group.

This is poised to deal a critical blow to Russia, which is forced to reroute its supply of crude and petroleum products to the Asia-Pacific after European and G7 sanctions, which come into effect in December 2022 and February 2023, ban these volumes. respectively.

On Jan. 7, analyst firm Vortexa told CNBC that nearly 890 unique tankers loaded Russian oil — both crude and oil products — in the past six months, with 107 of those vessels, or 12% of the total. obeyed. – then special sanctions.

The figures do not affect the January 10 announcement. The Paris-based International Energy Agency on Wednesday Of the 183 blocked tankers, about 160 were estimated to have carried more than 1.6 million barrels per day of Russian oil last year, accounting for 22% of Russia’s seaborne exports during the period.

The latest U.S. measures are also intended to tighten the number of vessels available for commission by non-Russian parties, raising the cost of transporting other tankers. Since the Jan. 10 announcement, the impact of the bans has spilled over into freight derivatives, with the volume of traded Forward Freight Agreement (FFA) contracts — which can allow traders to hedge against volatility in volatile freight rates — rising to 11,412 in January. It reached 7,900 and 6,700 on January 10 and 13, respectively, on January 14, according to data from the Baltic Exchange. The figures compare to average daily trades of 2,987 and 1,683 contracts in November and December, respectively.

Rates for supertankers sailing from the Middle East Gulf to the Asia-Pacific, a key route for the oil industry, rose more than 40% between January 9 and 14, according to Argus Media pricing data.

As a result, the sanctions could “significantly disrupt Russia’s oil supply and distribution chains,” he warned, noting that Russian exports would be hit by the “reduction of the shadow tanker fleet” and “the cancellation of shipping insurance, curbing of dominant oil.” Designation of leading companies in Russian oil traders and consumer markets.

The agency, however, could not take into account the recent steps of the United States in the Russian supply forecasts, while at the same time it noted that crude oil exports from the Eastern European country, which is the main member of the OPEC+ alliance, fell by 250 thousand barrels per day to 4.6 million barrels compared to the month. barrels/day.