War risk insurance rates for ships calling at Ukrainian ports have increased

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, Reuters reported, citing industry sources.

Insurance costs for war risk have risen on fears of further attacks.

War risk insurance rates for a typical seven-day voyage, which are set by individual insurers and are based on the value of the vessel, rose from 0.4% to 0.5% for calls to Ukrainian ports.

War risk insurance for Russian Black Sea ports, which are usually more expensive, was estimated at 0.65-0.8%, up from about 0.6% last week, the sources added.

The two tankers, which were under Western sanctions, were attacked by military drones while empty and heading to Novorossiysk, a major Russian oil terminal on the Black Sea.

“Rates have stabilized in line with this assessment. For trips to Russian ports, insurers are pricing in a wider range of possible targets and a higher probability of recurrence. As Ukraine becomes more active, the likelihood of Russia retaliating increases. This creates a more even risk gradient on both sides 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 on civilian vessels flying a non-Russian flag in international waters, said Andriy Ryzhenko, a military analyst and former deputy chief of staff of the Ukrainian Navy.

Ryzhenko believes it is unlikely that Russia will pay for commercial shipping to Ukraine in the territorial waters of Turkey, Bulgaria, and Romania, as this would be regarded as an attack on NATO territory.

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