Russia’s oil shipping costs to Asia from its main Baltic ports eased in early 2024, despite security concerns in the Red Sea, winter weather and rising scrutiny over the limits of a price cap imposed by the West, oil traders and shippers told Reuters.
According to two trading sources, the cost of shipping 100,000-ton Urals cargoes from Primorsk and Ust-Luga to Indian ports eased to $8 million from about $10 million in late November. However, it was as low as $5 million in September.
Tightness in the tanker market and Red Sea attacks that are disrupting the key Europe-Asia shipping route through the Suez Channel have pushed global crude oil freight rates higher.
But storms in the Black Sea and cold snaps in the Baltic, which would normally lead to a rise in freight costs, have so far had only a limited impact for Russian crude, traders said, with Russia yet to introduce ice class restrictions for oil tankers in its Baltic ports.
Tighter U.S. control over the price cap, which bans Western companies from providing maritime services including financing, insurance and shipping for Russian oil sold above a certain price, has also not led to a rise in transportation costs, the traders said.
Urals FOB (free on board) prices fell below the $60 cap in November as Brent prices retreated, prompting some smaller shipping companies to return to the Russian oil market.
“Large western (shipping) companies have not returned to the Russian oil market yet, but there are enough participants to curb the rise in transportation costs,” a Urals trader said.