Insurers raise premiums for Black Sea tankers as tensions mount, say traders

Insurance companies have notified charterers of ships operating in Russia’s Black Sea ports of an increase in additional payments known as “war risk premiums,” reports Reuters, citing four unnamed traders.

The war risk premium was increased from around 1% of the cargo’s cost to some 1.20%-1.25%, the traders said. The increase means every voyage will cost $200,000 per one Suezmax tanker (can carry 120,000-200,000 tonnes) leaving a Russian Black Sea port – more if Russian oil is delivered to India. The rise in the premium means the overall cost of the premium for such a vessel would be almost $1m.

A war risk premium was added to the common insurance costs for tankers last year after the February invasion of Ukraine by Russia.

A Black Sea Grain Corridor agreement signed in July 2022 collapsed after a year, and military actions in the Black Sea area of Russian and Ukrainian Black Sea ports have escalated since then. There have been attacks on Ukrainian Black Sea ports, Russian Black Sea ports, the area around the Kerch Strait that connects the Black Sea to the Sea of Azov, and on parts of Ukraine’s ports on the River Danube.

Traders added the increase was mostly applied to cargoes carrying Russian oil and products, while the premium of cargoes carrying Kazakh origin volumes was generally stable at around 1%.

“Volumes originated from Russia are associated with higher risks than others, though current situation gives insurers lots of reason to raise prices for anyone operating in Russian Black Sea ports,” one of the traders told Reuters.