The rising threats from Ukrainian attacks and the shortage of tankers have driven the transportation costs of Russian crude oil from the port of Novorossiysk to the Black Sea to their highest historical level. In the week ending September 6, the key rates for tankers transporting crude oil from Novorossiysk to West India and North China increased by 2.7% and 3.1%, respectively. This increase has occurred for the seventh consecutive week and reflects the growing pressures on the oil transportation market.
Transportation Costs to India and China
The cost of transporting crude oil to India is now $23.20 per barrel, and the cost of transporting from Novorossiysk to China has reached $25.70 per barrel. These figures represent the highest transportation costs for Russian crude oil exports from the Black Sea to Asia, and analysts believe that these prices are the result of a seven-week increase in transportation costs.
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Factors Contributing to Rising Costs
Analysts point to increased transportation risks and insurance costs, as well as reduced availability of tankers for routes outside Novorossiysk. In recent months, many tankers have taken longer journeys in the Middle East, and there is also a shortage of ships for transporting Urals grade crude oil from Baltic ports. As a result, the price of transporting crude oil from the Black Sea has risen sharply. However, amidst these rising costs, profits are still being made from the increase in global crude oil prices.
Over the past year, Ukraine has attacked the key oil port of Novorossiysk several times, aiming to reduce oil exports and Kremlin revenues. Some of these attacks have caused damage that led to the temporary suspension of oil loading in Novorossiysk and the nearby export terminal of the Caspian Pipeline Consortium (CPC), which loads oil from Kazakhstan for export to the Black Sea.
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