The rise in the cost of shipping oil as a result of sanctions imposed on the United States of America has caused quite a stir in the global oil shipping industry. Shipbrokers and merchants have reported an unexpected increase in the premiums paid for supertanker freight charges due to the US decision to tighten sanctions against Russia’s oil industry. This decision, which came to light when the US increased the severity of its sanctions against Russia, led to a rush among businesspeople to charter vessels to transport commodities from other nations to China and India.

China and India, in response to the US sanctions on Russian oil producers and ships, are seeking alternative sources of petroleum to comply with the constraints imposed by the US. These penalties are designed to prevent the importation of petroleum from Russia and diminish the income of the world’s second-largest oil exporter, as a response to Russia’s involvement in the crisis in Ukraine. Ukraine, the country facing the crisis, has been affected by Russia’s actions in the region.

In recent years, a significant number of vessels have been deployed from a shadow fleet to deliver oil to India and China, taking advantage of the low-cost Russian supply that was prohibited in Europe due to Moscow’s actions in Ukraine. Some of these vessels are alleged to have transported oil from Iran, another country subject to US sanctions. This shadow fleet comprises around 669 tankers involved in the shipping of oil from Russia, Venezuela, and Iran, with sanctions imposed on about 35 percent of these tankers by the US.

The increase in cargo prices for Very Large Crude Carriers (VLCCs) after Unipec made multiple supertanker hires has led to a surge in freight costs. Traders claim that Unipec procured significant sweet crude cargoes from Europe and Africa in the previous week, including oil from Norway, Senegal, Ghana, and Angola. These purchases have contributed to the rise in freight costs, according to Anoop Singh, the worldwide head of shipping research at Oil Brokerage.

Premiums for Dubai, Oman, and Murban reached their highest levels in over a year on Tuesday, with Dubai premiums exceeding $4 per barrel, the highest level seen in more than a year. The benchmarks for crude oil from the Middle East also increased from previous levels during this session. Unipec has planned to use eight tankers to transport oil from the Middle East since Friday, with more such shipments anticipated in the future.

The increase in shipping costs due to the US sanctions on Russian oil has had a significant impact on the global oil shipping industry. With countries like China and India seeking alternative sources of petroleum, the demand for oil shipping has spiked, leading to higher premiums for freight charges. The shadow fleet involved in the shipping of oil from sanctioned countries has faced challenges with sanctions imposed on a significant number of vessels. Despite these challenges, the market continues to adapt to the changing dynamics of global oil shipping.