Oil freight rates are affected by U.S. sanctions on Russia.

• The U.S. Treasury unveiled new strategies to reduce Russia's oil revenues on January 10th, targeting 183 vessels, which are mainly oil tankers that belong to the shadow fleet or are owned by Russian-based fleet operators.
• New U.S. regulations will limit the number of vessels that can be used by non-Russian parties, resulting in higher shipping costs for alternative tankers.
• The International Energy Agency warned that the sanctions could significantly disrupt Russian oil supply and distribution chains.

The cost of shipping oil increased after the U.S. announced stricter sanctions on Russia, which could harm Moscow's maritime supply chains.

The U.S. Treasury Department declared new actions to reduce Russia's energy income on January 10th. These measures include imposing sanctions on major producers Gazprom Neft and Surgutneftegas, as well as 183 vessels, which are primarily oil tankers that belong to the shadow fleet or are owned by Russia-based fleet operators.

The Treasury announced that it had extended sanctions to Ingosstrakh Insurance Company and AlfaStrakhovanie Group, both of which are based in Russia, as several of the designated tankers had transported both Russian and Iranian oil.

The sanctions imposed by European and G7 countries have forced Russia to reroute its crude and oil product supplies to Asia-Pacific, resulting in a critical blow to its economy.

In the past six months, over 890 unique tankers have loaded Russian oil, including crude and oil products, according to Vortexa, with 107 of these ships, or 12%, being subject to vessel-specific sanctions at the time.

The International Energy Agency reported that around 160 out of the 183 blocked tankers had moved over 1.6 million barrels per day of Russian oil last year, accounting for 22% of Russian seaborne exports over the period.

The latest U.S. measures are set to limit the number of vessels available for non-Russian parties, resulting in an increase in shipping costs for other tankers. Since the Jan. 10 announcement, the impact of the bans has extended to freight derivatives, with the volume of traded Forward Freight Agreement (FFA) contracts rising to 11,412 on Jan. 10 and reaching 7,900 and 6,700 on Jan. 13 and Jan. 14, respectively, according to data from the Baltic Exchange. These figures are significantly higher than the average daily trading volume of 2,987 and 1,683 contracts in November and December, respectively.

According to pricing data from Argus Media, the rates for supertankers traveling from the Middle East Gulf to Asia-Pacific increased by more than 40% between January 9th and January 14th.

The International Energy Agency (IEA) warned that the sanctions imposed on Russia could significantly disrupt its oil supply and distribution chains. The IEA noted that Russian exports will suffer due to the reduction in the shadow tanker fleet, the elimination of shipping insurance, the bridling of dominant traders of Russian oil, and the designation of key handling companies in consumer markets.

Despite acknowledging the recent U.S. actions, the agency failed to incorporate them into its Russian supply forecasts. Additionally, crude exports from the Eastern European country, a member of the OPEC+ alliance, decreased by 250,000 barrels per day in December compared to the previous month.