Late last week, we noted something remarkable taking place in the oil tanker market: amid a general unwillingness of tanker owners to send their vessels to Russian ports, the freight rates for a medium-sized tanker to load Russian crude jumped nearly threefold overnight last Thursday.
The freight rate to hire an Aframax tanker on the Baltic Sea to Europe route surged after Russia invaded Ukraine, while owners of oil tankers had already started to avoid Russian ports because of both the military invasion of Ukraine and apprehension that sanctions for oil could also come soon.
Rates for oil tankers on the TD6 Black Sea-to-Med route surged more than six-fold, by $90,752/day, to $107,382/day from under $17,000, according to data from the Baltic Exchange in London. That’s the highest since April 2020.
Meanwhile, Baltic Sea oil tanker rates have also soared. Ships on the TD7 Baltic-to-U.K. Cont. route rose by $13,407 to $135,148/day. This means that in under a week, rates on the TD6 route have risen more than tenfold: from
Fast forward to today, when rocketing prices went orbital, and the TD17 Baltic-to-Cont U.K.oil tanker route saw costs soar by another $35k/day to $210k/day, according to the Baltic Exchange in London. That’s the highest since at least 2008.
At the same time, ships on the TD6 Black Sea to Med route added $5k to $158k/day; this is a nine-fold increase from the $17,000 daily rate the route went for less than a week ago! Rates on the TD7 North Sea-Europe route added $1.7k to $78k/day
Two-thirds of Russia's crude oil exports are seaborne, from ports in the Black Sea and the Baltic Sea. The Russian flagship Urals crude grade loads from ports in the Baltic Sea, and most of it is sold in Europe.
As we reported on Thursday, while international benchmark oil prices were soaring on Thursday, the Urals grade was offered at the deepest discount in at least 11 years—$11.60 a barrel below Dated Brent, as traders feared sanctions on Russian oil. Even Chinese buyers of Russian seabourne oil had put their purchases on hold amid US concerns over Russian sanctions.
Owners of tankers have become reluctant to offer their vessels to load crude from Russia for fear that their future cargo could be breaching potential sanctions if the West decides to deploy the harshest sanctions against Russia after it invaded Ukraine early on Thursday.