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The end of the Ukraine grain deal is about more than one commodity [1]
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Date: 2023-07-21
Russia's economy in shambles and oil exports are collapsing, yet crude oil smashed a G7 price cap
The Russian strategy is to use the threats against commercial shipping to drive up insurance premiums, hoping that the financial pain will cut off grain shipments and force the West to make concessions on some of the sanctions that are stifling Russian trade, analysts said.
it’s more about oil, as it’s always been. Moscow says it will not participate in the year-old grain deal without better terms for its own food and fertilizer sales. This current move is more about making money across the market by driving the price up.
Associated costs in insurance and reinsurance of shipping will add up.
Russia's flagship Urals crude oil prices breached a price cap set by the Group of Seven, a blow to western sanctions efforts and arguably an economic win for Moscow. As always, it about the cost of doing business and actually constraining Russia’s ability to finance its war.
Moscow has already put shipping companies on notice that they now cross the Russian blockade in the Black Sea at their own peril, and could be treated as military targets. The warning came days after Russia pulled out of a multinational deal that had allowed desperately needed Ukrainian grain to make it to the world market. In a further sign of rising tensions, Ukraine on Thursday issued its own warning: Ships heading to Russian ports or to ports in occupied Ukraine, the Ministry of Defense said, will now be considered to be carrying “military cargo, with all the corresponding risks.” In Washington, a White House official accused Moscow at a news conference of engaging in a false-flag operation to implicate Ukraine if Russia attacked a ship. The waters where Russia is said to have placed the mines are in an area already mined by Ukraine to deter an amphibious assault.
09:45, 01/09/2023 — WORLD MARKETS, NEWS OilWorld.RU Ship insurance costs for transporting goods from the Black Sea have risen by more than one-fifth since the beginning of the year From January 1, when policies are renewed, reinsurers providing financial protection to insurance companies have added exemptions for ships and aircraft for Belarus, Russia and Ukraine. The policy, known as breach coverage, must be updated every seven days. [...] Rates are calculated as a percentage of the cost of the ship. Ship costs range from about $20 million for older ships to over $100-250 million for state-of-the-art tankers and liquefied natural gas (LNG) fueled ships. www.oilworld.ru/...
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