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Last updateΠαρ, 19 Ιουλ 2024 6pm

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One of the most discussed EU measures against Russia

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One of the most discussed EU measures against Russia is the sanction of Crude oil and products along with the price cap. In June 2022, the EU adopted a sixth package of sanctions that, among others, prohibits the purchase, import or transfer of seaborne crude oil and certain petroleum products from Russia to the EU. The restrictions apply from 5th December 2022 for crude oil and from 5th February 2023 for other refined petroleum products. Along with that, the EU decided that European vessels will be able to transport Russian crude oil and products from Russia to other destinations (third countries, except for EU) only if the crude oil/product is bought below a certain price cap (USD 60 per barrel for crude/ USD 45 per barrel for discounted petroleum products/ USD 100 per barrel for premium petroleum products). This decision was taken in order to limit price surges driven by extraordinary market conditions, and drastically reduce the revenues Russia has been earning from oil since it unleashed its illegal war of aggression against Ukraine and to stabilise global energy prices. Until now the price cap was not a big deal for owners and charterers as Russian Crude oil’s and products’ market prices were below the cap. But in previous days Russia’s Urals crude breached price cap, adding another headache to the wet market of seaborne trade. Russian Urals crude oil futures were trading around USD 63 per barrel mark on Friday 14th of July after remaining largely unchanged below the price gap imposed by the G7 since the beginning of May. Despite this increase, the Russian benchmark, which constitutes roughly 50% of Russia's oil exports, continues to trade at a nearly USD 20 discount compared to the international Brent crude oil benchmark. Recent data for June shows a small fall in Russian exports, with India along with China accounting for approximately 75% of total shipments in June, while Turkey and Egypt accounted for 6% and 5% respectively. India’s imports of Russian Crude are about 1.6 million barrels per day while China’s imports from Russia are almost at the 2/3 of India’s, at 1 million barrels per day. These numbers are a bit lower than April 2023 when India was importing 1.8 million per barrels and China 1.2 million per barrel respectively. On the Russian oil products export side, the things are the opposite. Russian exports have risen with Turkey importing 582,620 barrels per day, UAE importing 304,591 barrels per day and Singapore 303,100 barrels per day. Turkey’s exports are about 34% higher than April 2023, while UAE and Singapore have doubled their product imports from Russia since April 2023 taking the place of China and Saudi Arabia at the second and third place.

The TC Equivalents of VLCC, Suezmax and Aframax are on well below levels compared to first days of January 2023, with the TCE of VLCC being down around 20% and paying USD 19,993/ day, while the TCE of Suezmax and Aframax have lost around 50% (since 5th January 2023) each and now pay USD 36,742/ day and USD 32,804/ day respectively. On the product side, MR Atlantic Basket is down by 44% since the beginning of 2023 while MR Pacific Basket is losing about 57%, with both standing at USD 16,379 and USD 21,725/day respectively. MR Atlantic Basket is the only one TC Equivalent that stands below its 10year average. All the other TCEs (Pacific, VLCC, Suezmax, Aframax) are above their 10year average for almost all the days since February 22nd 2022 that the Russian invasion of Ukraine started.

Talking about the wet market, it’s a good opportunity to analyse the evolution of the second-hand prices of tanker market from January 2023 to middle of July 2023. The demand for vintage tankers is quite significant, boosting the prices of most 15-year-old vessels at higher levels than market’s expectations. As it was mentioned above, wet market’s freight rates have corrected significantly YTD, but this correction has not affected much the assets’ prices. In the VLCC segment, a 5-year-old vessel has lost only 4% since the beginning of the year (with current value at USD 96 mills), a 10-year-old VLCC is almost 9% lower since January 2023 (USD 70 mills), while a 15-year-old VLCC has lost around 5% and is now valued at USD 57 mills. Moving down the sizes, the Suezmax segment has witnessed an increase (around 3%) on 15-year-old vessels with their price being now around USD 39 mills. Furthermore, the price of 10-year-old Suezmax has also increased compared to the start of the year being now around USD 55 mills, while the current value of the 5-year-old Suezmax is at USD 72 mills, almost 7% up y-t-d. The 5-year-old, 10-year-old & 15-year-old prices of Aframax/ LR2 are also up by around 2%, 4% and 3% respectively year to date, and their values are at USD 63 mills, USD 51 mills & USD 37 mills accordingly. Last but not least, in the MR size, prices are almost at the same levels for 5-year-old and 10-year-old vessels, while the 15-year-old MR2 price is about 5% higher from the start of the year.

Sale and Purchase:

Definitely the S&P highlight of the week is the acquisition of five Chinese built Capesize vessels by clients of Danaos Shippping. The “Bulk Ingenuity” - 176K/2011, “Bulk Integrity” - 176K/2010, “Bulk Peace” - 176K/2010, “Bulk Achievement” - 176K/2011 and “Bulk Genius” - 176K/2012, all built in Jinhai Heavy Industry, were sold for region USD 105 mills . The “JY Atlantic” - 81K/2019, Chengxi was sold via auction for USD 30.15 mills while “Nord Hydra” - 77K/2014, Imabari was sold for region/xs USD 23 mills. The Chinese Ultramax “Mona Manx” - 64K/2017, Tsuneishi Zhoushan was sold for USD 27.6 mills to Chinese buyers and at the same time the two years older “Kambos” - 64K/2015, Cosco Zhoushan was sold to Chinese buyers for USD 24.85 mills. Last but not least, the Japanese built Handysize “Glorious Mahuta” - 38K/2015, Imabari was sold for USD 20.5 mills.

The tanker S&P activity was up for another week compared to dull activity of previous weeks but still in shallow waters comparing with May. The Suezmax “Donat” - 166K/2007, Brodosplit was sold for USD 41.2 mills while the “Sti Ville” - 50K/2013, HMD, 10 years old MR2 was sold to Singaporeans for USD 32.5 mills. Another two vessels built in HMD were sold this week, “Leon Poseidon” - 38K/2011 and “Advantage Pretty - 37K/2006” were sold for USD 25 mills and USD 19 mills respectively.

Xclusiv Shipbrokers Inc.

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