Russian oil freight rates to India ease further, proposed EU curbs may reverse trend

Ocean freight forwarding rates for Russian crude oil shipments from Baltic ports to India have seen a noticeable dip from late May through early June, driven primarily by an oversupply of tankers in the global market. However, the downward trend in cost shipping’s may be short-lived if the European Union’s proposal to lower the Russian oil price cap is implemented.

The EU, as part of its latest sanctions package against Moscow for its actions in Ukraine, has recommended reducing the Group of Seven (G7) price cap on Russian crude from $60 to $45 per barrel. The current price cap, imposed in late 2022, limits Russia’s access to Western Ocean freight forwarding companies and insurance services for any shipments sold above the cap, aiming to slash revenues for the Kremlin.

In recent months, the price of Russia’s Urals crude has consistently stayed below the cap trading at around $54.72 per barrel by Wednesday enabling a return of Western, especially Greek, freight forwarding sector players to the Russian oil export market. This has expanded freight systems supply chain solutions capacity and led to a softening of rates for long-haul shipments.

As a result, the supply chain and freight forwarding cost of transporting Urals crude from Baltic ports like Primorsk and Ust-Luga to Indian refineries has dropped to between $5.5 million and $5.7 million per one-way shipment. This is a decline from April-May’s average of $6 million and a sharp drop from the $8 million peak recorded in March. The surge in costs earlier this year followed a new wave of U.S. sanctions on Russian energy logistics, which disrupted freight handling processes at Indian ports and forced Russian sellers to find alternative tankers.

Despite the current reprieve, supply chain management freight forwarding experts caution that freight rates remain above January levels, when shipments cost between $4.7 million and $4.9 million. With discussions ongoing in the EU and G7, any policy shift such as tightening the cap could reduce tanker availability once again, sending freight rates upward and impacting India’s energy import costs.

As geopolitical dynamics continue to shape trade routes and pricing, India’s energy supply chain will depend heavily on agile freight forwarding systems and strategic engagement with both traditional and emerging maritime logistics partners.