Ship insurers have hiked the premium for ships operating in Russia’s Black Sea ports in the form of “war risk premiums”, a Reuters report said Wednesday. The war risk premium was hiked from around 1% of the cargo’s cost to somewhere between 1.20 and 1.25%.

The report cited four traders as sources and added that a “war risk premium” was added to the usual insurance costs for tankers last year after Russia invaded Ukraine.

Military skirmishes have heightened in the Black Sea area, including brushes between Russia and the US in the airspace over, especially since Russia pulled out of the Black Sea Grain Deal this July.

Reuters report cited several attacks that Russia reported at its Black Sea ports in recent times. “So far, oil loadings from Russia’s Black Sea ports have not been affected by the attacks, but risks are mounting,” the report quoted traders as having said.

“The increase means every voyage will cost $200,000 per one Suezmax tanker (can carry 120,000-200,000 tonnes) more if Russian oil is delivered to India. The rise in the premium means the overall cost of the premium will be almost $1 million,” Reuters said.

According to assessments, while the cost is not exorbitant it only escalates Russia’s costs and, therefore, negatively impacts the country’s overall oil export costs which have constantly surged since February 2022 owing primarily to Western sanctions.

The Reuters report said that the traders it talked to added that the increase was mostly affecting Russian oil and products.

“Volumes originated from Russia are associated with higher risks than others, though current situation gives insurers lots of reason to raise prices for anyone operating in Russian Black Sea ports,” one of the traders told Reuters.

According to reports, grain traders have increasingly been becoming wary of the safety of shipments that has most certainly added to the hike in the insurance premium.

“Overall crude oil loadings from Black Sea Novorossiisk and CPC terminal account for some 2% of global supply. Oil product exports from Russia’s Black Sea ports are about 4 million tonnes per year,” Reuters observed.