The escalating crisis over Ukraine has upended the cost of shipping oil by sea. Freight rates for hauling crude from Russia are surging as Western sanctions push up the risks of carrying cargoes on those routes, while a scramble for alternative supplies boosts the rates for other passages.
Shipowners are offering at least double the last transacted rate to carry so-called ESPO crude from Kozmino, which loads oil from Russia’s Far East, to ports in China, according to traders and a shipbroker who asked not to be identified. At the same time, the cost of shipping oil from the U.S. to Ningbo by supertanker has jumped, as has the rate for Ceyhan, Turkey, to China.
Although U.S. oil is considered pricey versus comparable crude from the Middle East, grades from the U.S. Gulf Coast such as Mars Blend are alternatives to Russia’s flagship Urals crude, traders said. Other replacements are Iraq’s Basrah Medium and Saudi Arabia’s Arab Light, while those for ESPO and Sokol include Murban, Arab Extra Light and even West Texas Intermediate Midland.