Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Insurance prices for vessels trading in the Black Sea have tripled over the past month and are set to keep climbing following recent Ukrainian attacks on ships and ports in the region, insurance brokers say.
The cost of war risk insurance for ships sailing through the Black Sea — a critical trade zone for commodities such as grain and oil — jumped after attacks by Ukrainian special forces on infrastructure including Russia’s Novorossiysk port.
War risk insurance prices have risen from about 0.25 to 0.3 per cent of a ship’s value in early November to between 0.5 and 0.75 per cent this week, Marcus Baker, head of marine and cargo for broker Marsh, told the Financial Times, bringing price rises to as much as 250 per cent.
A commodities insurance broker at another firm said that prices for their clients had risen more than 200 per cent.
Baker said increases had been the steepest in Russian areas of the Black Sea, which is also bordered by countries including Ukraine, Georgia, and Turkey. “Russia will escalate things into Ukraine, so we will probably see further increases in rates in the region,” Baker said.
Ukraine has recently targeted ships in Russia’s so-called shadow fleet of oil tankers that Moscow has used to evade western sanctions since the full-scale invasion of Ukraine in 2022.
Ukrainian drones hit two sanctioned tankers, the Kairos and Virat, off Turkey’s Black Sea coast last Friday as part of a stepped-up campaign to squeeze Moscow. The tanker Midvolga 2 also came under attack, Turkey’s maritime authority said on Tuesday, although Kyiv said it had “nothing to do with this incident”.
The strikes come as the US presses on with efforts to clinch a peace deal between Russia and Ukraine.
Prices have risen most sharply for Russian-linked tankers, the commodities insurance broker said, followed by Russian-linked bulkers that transport bulk cargo such as grain.
One maritime security expert, who asked not to be identified, said that the strikes had rattled tanker owners, who were concerned that even ships conducting “legitimate trade” were being targeted.
A Turkish-owned oil tanker was last week damaged by four explosions off the coast of Senegal. Following the attack, Istanbul-based owner Besiktas Shipping said it would halt all “Russia-related voyages”.
The attack may have been a Ukrainian effort to undermine tanker owners trading with Russia, Baker said, adding that Ukrainian involvement in the Senegal incident had not been confirmed.
“Nobody would have put Senegal on the map as a heightened war risk . . . it could mean that there’s a general increase in war risk [insurance] rates” beyond the Black Sea, he said. “This type of [attack] is just becoming a bit more random.”
The maritime security expert said shipowners worried that the escalation might spur Russia to retaliate by hitting Ukrainian ammonia and grain exports.
Russian President Vladimir Putin on Tuesday called Ukraine’s attacks on the shadow fleet “piracy” and threatened to cut Ukraine “off from the sea entirely”.
Jon Gahagan, president of maritime risk group Sedna Global, said the Black Sea had been a “bubbling point” since Russia’s full-scale invasion of Ukraine in 2022.
Establishing export corridors for Ukrainian grain meant the situation had “calmed down”, but he added: “Everybody is watching this with interest to see whether there’s a wider escalation.”