The Oceania Times

Top Menu

  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

Main Menu

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

logo

The Oceania Times

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • China to boost economic rebound, stabilize foreign trade, investment

  • Senior Australian ministers to visit France, Britain to boost ties

  • Does That Call For Deeper Study Of Its Financial Prospects?

  • SG Americas Securities LLC has acquired shares of Tapestry, Inc. (NYSE:TPR).

  • Emfo LLC acquires 12,412 Alphabet Inc. shares (NASDAQ:GOOG)

Commodities
Home›Commodities›EU’s Russian ships insurance ban to distort commodities trade: sources

EU’s Russian ships insurance ban to distort commodities trade: sources

By Megan
June 3, 2022
46
0
Share:

The European Union’s ban on insurance and reinsurance of Russian ships is expected to further complicate trade in dry bulk and liquid commodities with Russia, making them more expensive, delaying scrapping of old ships, pushing up global freight and encouraging private deals with owners ready to call on sanctioned ports, according to trading, insurance and shipping executives.

The views from the shipping market follow a recent remark from Ursula von der Leyen, president of the European Commission, saying that there is a ban on insurance and reinsurance of Russian ships by EU companies.

The remark raised concerns in the commodities markets amid a lack of clarity whether the ban would cover ships transporting Russian oil or other commodities.

There is a built-in clause in all protection and indemnity, or P&I insurance agreements, that any voyage of a ship to a sanctioned location under UN, EU, UK and US laws will automatically make it ineligible for the cover, a maritime insurance executive said in Singapore.

Since the Ukraine war began, several insurance companies were already staying away from providing insurance cover to ships wherein Russian entities had made investment or non-Russian vessels were carrying Russian cargoes.

The cautious approach was due to payment issues as several of the banks through which insurance premiums exchanged hands had already been brought under the ambit of Western sanctions, the executive said.

Now, with the latest explicit sanctions against insurance of Russian ships, those carrying cargoes to and from Russia will do so at their own risk and invite stringent penalties if their voyages are detected, he said.

Those ships which undertake voyages to and from Russia will not get any insurance cover of Western P&I clubs but can still manage to do trade based on national clubs and sovereign guarantee provided by countries willing to trade with it, a chartering executive with a global commodities trading company said.
He pointed to the model of trade adopted with Iran when half a dozen countries including India, Japan and Taiwan were initially exempted from the Western sanctions against Iran. A similar approach is possible as several countries from Hungary to India are still willing to trade with Russia, he said.

Japan, which has already announced its ban on Russian coal and oil imports in phases, is closely monitoring the EU’s ban on insurance and reinsurance of Russian ships, a Japanese government source said.

In the face of the EU sanctions against Iran, Japan introduced a law in 2012 to compensate protection and indemnity cover per tanker carrying Iranian oil — a scheme that remains operational to date. Japan suspended its Iranian oil imports in May 2019 after the US declined to extend its 180-day sanctions waiver beyond early May on Iranian oil imports.

War premium

Sources with a few tankers’ charterers in Asia said a small part of the global tankers and dry bulk fleet has already started to specialize in trading in Russian oil, coal, grains and refined products, notwithstanding the financial roadblocks.

In the early days of the war, the insurance cover for these ships became exorbitantly expensive as it involved a war risk premium but it was offset by the discount at which the cargoes were offered by the Russians. This premia, which was initially 1% of the value of the ship’s hull, increased 10 times within weeks of the war, making a ship’s insurance more expensive the cost of chartering it.

Now this insurance will not be available at all even at a hefty premium, so cheaper local insurance will be used as a substitute, hoping all the time that an untoward incident does not happen during the course of the voyage, a VLCC broker said.

As was the case with Iran, older ships, which would have otherwise been scrapped, will instead try to participate in Russia-origin or Russia-bound trade, said a source with a clean tankers’ owner.

This will delay scrappings and expand fleet size in the medium term but in turn tighten short term supply for loading cargoes elsewhere and push up freight, the source said.

The global VLCC fleet now comprises more than 850 ships, which can each carry two million barrels of oil each and just three of them were demolished in the first four months of this year. In terms of million deadweight, the fleet has expanded by over 50% during the last eight years. Many such old ships, both tankers and dry bulk, will explore business opportunities in Russian commodities, brokers in Asia said.
Source: Platts

Source link

Previous Article

Broker Confidence Ticked Up in May — ...

Next Article

Even with new broker commissions, the economics ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Megan

Related articles More from author

  • Commodities

    Century Global Commodities Corporation wraps up FY22 with working capital balance of C$11.3M

    June 28, 2022
    By Megan
  • Commodities

    Large European Pension Funds Are Extremely Bullish On Commodities

    October 27, 2022
    By Megan
  • Commodities

    Growth constraints to shackle industrial metals for a few more months

    December 30, 2022
    By Megan
  • Commodities

    India Strategy – Financials Driving PAT Growth While Commodities Slip Into ‘Loss Pool’; Commodity Users To Benefit From Lower Prices ...

    November 2, 2022
    By Megan
  • Commodities

    Why commodities should be part of your 2023 portfolio

    December 23, 2022
    By Megan
  • Commodities

    Commodities worth $609m traded at IME in a week

    September 19, 2022
    By Megan

Leave a reply Cancel reply

You may interested

  • Brokers

    Can This Fintech’s Unstoppable Growth Continue?

  • Brokers

    New York Residential and Commercial Broker Confidence Drops

  • Australian Economy

    PwC names Amy Auster new Chief Economist for Australia

  • LATEST REVIEWS

  • TOP REVIEWS

Timeline

  • January 29, 2023

    China to boost economic rebound, stabilize foreign trade, investment

  • January 29, 2023

    Senior Australian ministers to visit France, Britain to boost ties

  • January 29, 2023

    Does That Call For Deeper Study Of Its Financial Prospects?

  • January 29, 2023

    SG Americas Securities LLC has acquired shares of Tapestry, Inc. (NYSE:TPR).

  • January 29, 2023

    Emfo LLC acquires 12,412 Alphabet Inc. shares (NASDAQ:GOOG)

Best Reviews

Latest News

Investment

China to boost economic rebound, stabilize foreign trade, investment

China will consolidate and expand the momentum of its economic rebound, accelerate consumption recovery and stabilize foreign trade and investment, according to the decisions made at the State Council executive ...
  • Senior Australian ministers to visit France, Britain to boost ties

    By Megan
    January 29, 2023
  • Does That Call For Deeper Study Of Its Financial Prospects?

    By Megan
    January 29, 2023
  • SG Americas Securities LLC has acquired shares of Tapestry, Inc. (NYSE:TPR).

    By Megan
    January 29, 2023
  • Emfo LLC acquires 12,412 Alphabet Inc. shares (NASDAQ:GOOG)

    By Megan
    January 29, 2023
  • Recent

  • Popular

  • Comments

  • China to boost economic rebound, stabilize foreign trade, investment

    By Megan
    January 29, 2023
  • Senior Australian ministers to visit France, Britain to boost ties

    By Megan
    January 29, 2023
  • Does That Call For Deeper Study Of Its Financial Prospects?

    By Megan
    January 29, 2023
  • SG Americas Securities LLC has acquired shares of Tapestry, Inc. (NYSE:TPR).

    By Megan
    January 29, 2023
  • China to boost economic rebound, stabilize foreign trade, investment

    By Megan
    January 29, 2023
  • Australia’s economy: boom or bust?

    By Megan
    September 9, 2019
  • Australian economy suffers virus symptoms

    By Megan
    February 10, 2020
  • Australian economy likely already slowing in Q2 before Delta downturn

    By Megan
    August 30, 2021

Trending News

  • Investment

    China to boost economic rebound, stabilize foreign trade, investment

    China will consolidate and expand the momentum of its economic rebound, accelerate consumption recovery and stabilize foreign trade and investment, according to the decisions made at the State Council executive ...
  • Australian Economy

    Senior Australian ministers to visit France, Britain to boost ties

    SYDNEY, Jan 29 (Reuters) – Australia’s defence and foreign ministers on Sunday said they aimed to deepen security ties with France and Britain during visits to Europe this week, flagging ...
  • Investment

    Does That Call For Deeper Study Of Its Financial Prospects?

    Most readers would already be aware that Parkway Life Real Estate Investment Trust’s (SGX:C2PU) stock increased significantly by 7.0% over the past month. Given that stock prices are usually aligned ...
  • Stock Shares

    SG Americas Securities LLC has acquired shares of Tapestry, Inc. (NYSE:TPR).

    According to the most recent filing that the company has made with the SEC, SG Americas Securities LLC increased the number of shares of Tapestry, Inc. (NYSE: TPR) that it ...
  • Stock Shares

    Emfo LLC acquires 12,412 Alphabet Inc. shares (NASDAQ:GOOG)

    According to the most recent 13F filing Emfo LLC made with the Securities and Exchange Commission, the company increased its holdings in Alphabet Inc. (NASDAQ: GOOG) during the third quarter ...
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions
© Copyright The Oceania Times. All rights reserved.

SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.