EXCLUSIVE: Insurers raise premiums for Black Sea tankers as tensions rise – merchants

MOSCOW (Reuters) – Insurance companies have notified charterers of ships operating in Russia’s Black Sea ports of an increase in extra payments known as “war risk premiums,” four merchants said.

The war risk premium was added to tanker co-insurance costs last year after the start of Russia’s military action in Ukraine, which Moscow describes as a private military operation.

Military actions have escalated in the Black Sea region of the Black Sea ports of Russia and Ukraine since the collapse of the grain export deal in mid-July.

Recently, Russia has reported several attacks on its Black Sea ports. So far, oil loading operations from Russia’s Black Sea ports have not been affected by the attacks, traders said, but the risks are increasing.

Traders said the war risk premium increased from about 1% of the cost of the shipment to about 1.20-1.25%.

This increase means that each voyage would cost $200,000 per Suezmax tanker (which can carry between 120,000 and 200,000 tons) more if Russian oil was delivered to India. The higher premium means that the total cost of the premium will be approximately $1 million.

Although the amount is not huge, it adds to Russia’s total oil export costs, which have increased since February 2022 due to the sanctions.

At the height of the Russian supply crisis and sanctions, Russian companies were paying up to $20 million per tanker for freight insurance and freight costs that accounted for more than a third of the value of each shipment.

Traders added that the increase applied mostly to cargoes carrying oil and Russian products, while the premium for cargoes carrying volumes originating from Kazakhstan remained generally stable at around 1%.

“The volumes coming from Russia are associated with higher risks than others, although the current situation gives insurance companies plenty of reasons to raise prices for anyone working in Russian Black Sea ports,” said one trader.

Grain traders have expressed concerns about the security of grain shipments, and the rise in the war risk premium for oil tankers shows that concerns have spread to wider markets.

Total crude oil shipments from the Novorossiysk terminal on the Black Sea and the CPC terminal account for about 2% of global supplies. Oil product exports from Russia’s ports on the Black Sea amount to about 4 million tons annually.

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