The cost of transporting Russian Ural crude from Baltic ports to India for shipments in July fell to its lowest level in six months on broader weakness in the tanker market and reduced risks for shipowners, traders said on Tuesday.
“Freight rates have fallen everywhere, including on European routes, and are at their lowest levels in recent months,” said one trader.
“In the summer there are fewer delays, there is enough tonnage and it is cheaper to transport crude oil. There could also be a drop in production, shipping and trading volumes,” the trader added.
Ural crude oil cargoes to be offloaded from the ports of Ust-Luga, Primorsk and Novorossiysk in May are trading well below the $60 per barrel price cap, despite a smaller discount to Brent and lower freight rates.
The cost of transporting the Urals from Baltic ports to India fell to just $6.1 million per trip in July, while some vessels were set at a fixed price of around $6.4 million. This is down from $6.9 million to $7.3 million for June packages.
The cost of transporting the 140,000-ton Ural cargo from Novorossiysk to India in July has dropped to around $5 million per trip, the sources added.
Russian crude oil imports from China and India are expected to hit all-time highs in May as buyers gorged on reduced supplies, reducing demand for Middle East and African oil, distracting data showed.
Russia hopes freight rates will return to normal within a year, Russia’s Deputy Energy Minister Sorokin said in late April.