Cost of delivering Russian Urals oil to India increases by 20%

Freight rates to ship Urals crude from Baltic ports to India rose by some 20% in February to $7 million to $8 million per voyage amid U.S. sanctions and rising exports that required more vessels, according to three trade and shipping sources and Reuters calculations. Higher freight costs mean Russian oil exporters will earn less for their oil sales as they spend more on shipping.

Russia’s provisional February loading plan for western ports was revised up by 19% to 1.9 million barrels per day because of lower output from refiners, and as per calculations showed early this month. The freight cost for the route from Russian Baltic ports and Indian ports could be from $7 million to $8 million per one-way trip depending on the shipowner, the charterer and the supplier of oil, against around $6 million in January.

Freight rates for shipments of Russian oil from its western ports to India rose by 25% in mid-January after the U.S. imposed sanctions on 183 vessels involved in Moscow’s energy exports. If a sanctioned entity is involved in the shipment, the price might be higher, while if a non-sanctioned Russian oil company is a supplier, a shipowner might offer a better price. The so-called ‘dark fleet’ vessels cost more than those provided by companies using Western services. Those shipowners will ask for a precise check of the supplier and price cap compliance.

Under the price cap imposed in 2022, suppliers of Russian oil are only able to use Western services such as shipping and insurance if Russian crude trades below $60 per barrel.

The dark fleet – which Kpler and other ship-tracking agencies also refer to as a shadow fleet – consists of tankers which knowingly operate to circumvent Western sanctions to ship goods.