The likely insurance ban that both the UK and the European Union are looking to put on any tankers carrying Russian oil anywhere in the world is expected to create a huge further shake-up in tanker fortunes. The insurance ban follows swiftly on from news the EU is to stop taking seaborne imports of Russian oil this year.
Crunching the numbers on what the outcome could be is Poten & Partners, the New York-based tanker brokers, which has predicted that all the sanctions, especially with the extra pressure of the insurance ban, could see Russia cut its exports from the Black Sea and the Baltic by 50% to 1m barrels per day each.
Aframaxes and suezmaxes are the preferred tankers to export crude from the Baltic and the Black Sea. If an insurance ban takes most of the international tanker fleet out the equation, Russia, China and India will have to use domestically owned or controlled tonnage to move the crude, Poten pointed out in its latest weekly report.
For the Baltic exports, Poten reckons a fleet of 20 aframaxes for lightering and 23 VLCCs would be needed to move 500,000 barrels per day to China and 31 suezmaxes to move a similar volume to India. For the exports from the Black Sea, the requirement is for 10 aframaxes, 20 to 25 VLCCs and 20 suezmaxes.
“Finding these vessels and arranging insurance for them outside the EU and UK markets could be very challenging,” Poten pointed out, adding that it could also make it difficult for these vessels to get employed in regular international oil trades.
The insurance ban will be keenly felt by Greek shipowners, who in the opening 100 days of the war between Russia and Ukraine, have been among the top movers of Russian cargoes.
Using marine insurance as a sanctions weapon is not new. In 2012, a European Union oil embargo on Iran prohibited EU insurers from covering Iranian oil exports anywhere in the world. This proved to be a very powerful tool with Poten noting how Iranian exports dropped 25% to 30%. The difference with Russia in 2022, however, is that countries such as China and India are not onboard with current sanctions.