Shipping costs for Russian Urals crude from Baltic ports to India for loadings in July eased to their lowest level in six months amid general softness in the tanker market and lower risks for shipowners, traders said on Tuesday.
“Freight rates have fallen everywhere, including European routes, and are at their lowest levels in recent months,” a trader said.
“There are less delays in summer, there is enough tonnage and it’s cheaper to carry crude. There may be a decline in production, shipping and trade volumes as well,” the trader added.
Urals crude oil cargoes loading from Ust-Luga, Primorsk and Novorossiisk ports in May are trading well below the price cap limit of $60 per barrel despite a narrowing discount to Brent and lower freight rates.
The cost of shipping Urals from Baltic ports to India in July fell to as low as $6.1 million per voyage, while some vessels were fixed at around $6.4 million. This is down from $6.9-$7.3 million for June parcels.
Transportation costs for the 140,000-tonne Urals cargoes from Novorossiysk to India in July have eased to some $5 million per the voyage, the sources added.
Russian crude oil imports by China and India in May are expected to hit an all-time high as buyers gorged on discounted supplies, reducing demand for oil from the Middle East and Africa, sidetracking data showed.
Russia hopes that freight rates will return to normal within a year, Russia’s Deputy Energy Minister Sorokin said late in April.