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Shipping ‘hurt’ by Ukraine conflict amid record volatility on commodities market

Shipping association BIMCO says inflationary pressure from higher prices arising from the Russian military operation in Ukraine will stoke inflation and curb demand for tankers and bulk carriers, despite any tonne-mile boost

Hurdles to ship cargoes from Russia are rising as underwriters and lending syndicates scrutinise details of each voyage. Financial and banking curbs are complicating trades

RUSSIA’S military incursion into Ukraine will delay and mute the long-anticipated rebound in moribund tanker markets as oil prices hit a 13-year high, while closed ports and record grain prices stifle bulk carrier demand, according to BIMCO.

The world’s largest international shipping association said the events in Ukraine would hurt all shipping segments as dramatic and volatile rises in prices for commodities such as metals, wheat, oil, and gas stoked global inflation and curbed demand.

Both Ukraine and Russia accounted for 10% of global grains exports while Russia controlled about 10% of seaborne shipments of crude, fuel oil and refined products, Niels Rasmussen, BIMCO’s chief shipping analyst, said in a report published today about the conflict’s impact on global shipping.

Diminishing numbers of tankers were seen loading Russian crude and oil products from key Black Sea, Baltic and eastern ports on Monday as buyers self-sanctioned and shunned cargoes while shipowners weighed risks and complexities of doing business. 

How would any ban on Russian crude affect shipping?

Some 1,334 tankers loaded crude and oil products from Russian ports since 2019, Lloyd’s List Intelligence data shows.

Russian-controlled Sovcomflot is the most exposed, with 74 vessels totalling just over 8.1m dwt tracked loading crude or refined products from Russian ports in the past 36 months. That comprises about 5% of all tankers tracked.

The data covers all tankers more than 60,000 dwt and some, but not all, smaller tanker sizes.

Private companies operated by Greek shipowners are also heavily exposed, reflecting their dominant position in these trades.

George Economou, and the Economou group of companies, have the next-highest tally of tankers engaged in Russian trading after Sovcomflot. Some 45 tankers comprising 5.5m dwt that belong to Economou lifted Russian-origin crude over the past three years, data show.

Economou is closely followed by Andreas Martinos and family interests via Minerva Marine (43 tankers and 5m dwt, Diamantis Diamantidies through Marmaras Navigation  (32 ships and 4.6m dwt), and the Prokopiou family via Dynacom Tankers Management (31 tankers and 4.4m dwt).

All up, there are 262 beneficial owners listed alongside the 1,383 tankers, reflecting the highly fragmented tanker ownership.  Listed companies Frontline (22 ships, 2.8m dwt), Teekay Corp (20 ships, 2.7m dwt), and Tsakos Energy Navigation (31, 3.7m dwt) were also represented, as was the Zodiac Group Monaco (23, 2.7m dwt).

Which vessel types are most engaged in Russian trades?

Suezmax and aframax vessels are predominantly used to lift Russian crude. Lloyd’s List Intelligence figures show that aframaxes comprised 77% of all trade (60,000 dwt and above), followed by suezmax tankers at 18.6%.

Handysize tankers are used to ship refined products ranging from 20,000-tonne cargoes to 40,000-tonne cargoes from Russian Baltic ports to destinations to northwest Europe. 

Most of the refined products are middle distillates comprising diesel, gasoil and jet fuel, as European refineries don’t make enough of these products to meet demand because of how they are configured.

As much as 70% of Russian crude exports are said to lack buyers despite heavily discounted prices, even as diesel cargoes sold before the February 25 invasion were discharged at ports in Germany, France and the UK over the weekend. 

“The EU is the major taker of all Russia’s (oil) exports and has so far taken no steps to sanction it; nor has the US White House despite pressure from Congress,” said Mr Rasmussen.

“China could emerge as a buyer for Russian crude which could help alleviate some of the current global supply concerns as the EU could in turn buy more from the Middle East.

“This could lead to increased tonne-mile demand but if the high prices are sustained, overall demand would still suffer. 

“The much-awaited rebound in the tanker markets will be further delayed and be more muted than otherwise expected,” he said.

Tanker rates that have yet to recover from a protracted, pandemic-induced slump exceeding 18 months as the supply of ships outpaces demand. The world’s top 10 listed tanker owners collectively reported more than $1bn in losses over 2021.

Charter rates on aframax and suezmax routes for shipping crude from Baltic and Black Sea ports surged between 800% and 1,600% in the past nine days and exceeded $262,000 per day for Primorsk-Rotterdam cargoes on Monday. 

These spikes have not extended to routes beyond tankers engaged in Russian trades. 

Politicians do not want to sanction or disrupt the flow of hydrocarbons out of Russia for fear it will raise consumer prices further, said one Western shipowner executive still operating in Russia, speaking on background. 

The shipowner said tankers would continue serving the world’s leading oil traders while it remained legal, safe and feasible. They also said that hurdles to ship cargoes were getting higher, on top of banking and financial curbs.

Underwriters and lending syndicates required detailed information about voyage details, while the overall high degree of scrutiny slowed down the shipowner’s ability to do business, they said.

The Russia-Ukraine situation pushed crude prices even higher on Monday. Brent crude is now 37% more than February 25, and settled at $129 per barrel in late Monday trading, while gasoil futures — against which diesel is priced — are 50% higher. 

The US and EU have yet to comment further on whether they will adopt UK-style port restrictions on ships that are Russian-owned or affiliated, a move last week that ensnared some 430 internationally trading vessels.

There is growing political pressure from some countries including Poland for a ban on Russian oil exports at a time when global crude production is already stretched and inventories are low.

The move would not only push prices higher but imperil the already patchy and uncertain pace of demand growth for transport fuels that is seen as crucial for any tanker rates rebound.

Russia seaborne crude exports comprise some 5m barrels per day and refined products a further 2.7m bpd, with 60% heading to Europe, according to BIMCO. Vessel-tracking indicates that loadings from Russian ports have slowed by about 1.5m bpd in the past week.



The EU27 and UK import some 40% of 10ppm diesel from Russia, their biggest export market for middle distillates including gasoil and jet fuel, European Commission customs data showed.

Although tankers have diverted from UK ports because of the ban on Russian-affiliated ships, some Primorsk-loaded cargoes have discharged in Germany, France the the UK over the weekend.

One aframax tanker, Elli (IMO: 9412452), loaded at Novorossiysk on February 25 and is signalling it will arrive in Houston on March 22. Others are signalling ports in Italy, Romania, Turkey and Bulgaria.




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