Shipping insurance rates in the Black Sea rose after Ukraine attacked "shadow fleet" tankers

The cost of transporting crude oil across the Black Sea rose on Monday after Ukrainian military drones hit two tankers heading to a Russian port, as insurers fear further attacks, Reuters reported, citing industry sources.

Two empty tankers under Western sanctions were attacked by military drones as they headed to Novorossiysk, a major Russian oil terminal on the Black Sea.

War risk insurance rates for a typical seven-day voyage, which are determined by individual insurers and based on the value of the vessel, have increased compared to last week from 0.4% to 0.5% for calls to Ukrainian ports, and from 0.6% to 0.65-0.8% for Russian Black Sea ports, which are typically more expensive.

“The incidents in the Black Sea point to Ukraine’s campaign to limit Russian oil revenues, which has shaped insurers’ assessment of intent and capabilities. For operations in Russian ports, insurers are assuming a wider range of possible targets and a higher probability of recurrence. As Ukraine becomes more active, the likelihood of Russia responding increases, creating a more even risk gradient in both directions than we have seen before,” said Munro Anderson, chief operating officer at Vessel Protect.

Turkish President Recep Tayyip Erdogan said on Monday that attacks on commercial vessels in the Black Sea were unacceptable and issued a warning to "all parties involved."

The recent incidents in the Black Sea were the first attacks in international waters on civilian vessels flying a flag other than the Russian Federation, said Andriy Ryzhenko, a military analyst and former deputy chief of staff of the Ukrainian Navy. He believes it is unlikely that the Russian Federation will retaliate by attacking commercial vessels carrying cargo to/from Ukraine in the territorial waters of Turkey, Bulgaria and Romania, as this would be seen as an attack on NATO territory.