Three traders on Friday said that the freight rates for Russian oil transport are expected to increase due to the upcoming winter season and new sanctions imposed against Russian fleet.

The UK has introduced the most severe sanctions against Russia's shadow fleet of merchant ships. The new restrictions will be imposed on 30 vessels, which are part of a shadow fleet that is used to circumvent the Western embargo by exporting Russian oil.

The number of oil tanks under UK sanctions is expected to reach 73.

According to traders, the cost of Urals oil shipping from Primorsk and Ust-Luga to India remained unchanged for the second consecutive month due to a stable supply of tankers, and a reduction expected in oil sea shipments in December.

"Freight rates have remained stable." One of the traders stated that there is sufficient tonnage but the export volume is decreasing.

The traders reported that the cost of transporting a standard vessel from the Baltic port in Russia to western India is between $4.9 and $5 million, a small change from October's levels.

A second trader stated that the stability of freight rates could change in the near future as seasonal factors will affect costs.

The traders stated that the need for more tonnage is growing as the navigation needs change with the seasons. For example, the ice conditions in Russia's Baltic port will require ICE-class tankers which are not readily available on the market.

Traders said that the weather conditions on the Black Sea also worsen during winter, increasing the costs. According to Riverlake, the cost for oil tankers passing through the Turkish Straits has increased to its maximum since February 2024. It amounts to approximately 10 days from Nov. 1 to 27.

(source: Reuters)