Russian to cut oil exports from Black Sea

Russian oil producers Rosneft and Lukoil will sharply cut oil exports from the Black Sea port of Novorossiisk in July as the companies resume operations at their refineries, reports Reuters

Combined Novorossiisk oil loadings by Rosneft and Lukoil in July will fall by some 220,000 barrels per day (bpd) as compared to last month.

Last week Russian government decided to continue with unrestricted gasoline exports in July, extending the waiver for a partial ban on overseas fuel sales, as Russia's domestic oil plants produce enough oil products to meet peak seasonal demand despite a spate of Ukrainian drone attacks on refineries.

Rosneft oil exports from Novorossiisk are set to fall to 0.62 million metric tons in July from 1.06 million tons in June, while its Tuapse refinery is set to resume crude runs this month.

Lukoil's exports from the port will fall to 0.19 million tons in July from 0.58 million tons last month.

Lukoil restarted a key piece of equipment for oil processing, the CDU-6 crude distillation unit, at its NORSI refinery, Russia's fourth-largest, following a drone attack in March.

Rosneft and Lukoil did not reply to Reuters requests for comments.

Novorossiisk total oil loadings in July were set at 1.8 million tons, down from 2.9 million tons in June.

Russia's overall oil exports and transit from its western ports in July are expected to decline from June amid higher refinery runs and Moscow's pledge to stick to OPEC Plus output cuts.

Turkey: Navigation affected due to wildfires

More than 150 vessels, including 23 tanker and 33 dry bulk vessels were halted at the northern and southern entrances of Turkey’s Dardanelles straits amidst raging wildfires in coastal regions, with northbound shipping resuming by late Thursday

Ship traffic resumed on Thursday in one direction in Turkey's Dardanelles Strait, its forestry minister said, as firefighters brought a major blaze in the northwest Canakkale region under control.

The strait, which links the Aegean Sea and Black Sea to the north, is a major shipping route for commodities such as oil and grains.

More than 150 ships had been halted at the north and south entrances to the Dardanelles on Wednesday evening to allow for helicopters and planes to scoop up water to douse the flames.

"We have brought the fire under control before 48 hours were up ... Our only consolation is that there has been no loss of life," Forestry Minister Ibrahim Yumakli told reporters.

Aerial vehicles will continue cooling efforts throughout the day on Thursday and ship traffic in the Dardanelles resumed in one direction, he said, without specifying which one.

Shipping agency Tribeca said northbound ships would be allowed to transit the Dardanelles after 0800 GMT on Thursday.

Helicopters and land vehicles battled after darkness fell on Wednesday to contain the fire and ship traffic resumed for several hours before being halted again just after midnight GMT.

More than 1,200 people from 11 villages have been evacuated from the path of the fire, which broke out in Cannakale province on Tuesday and was fanned by high temperatures, dry air and strong winds.

Some 90 people suffered injuries from the fire, which affected 4,080 hectares around 11861 acres, including forest and agricultural land, authorities said. No deaths were reported.

 

G7 calls for extension full implementation and expansion of Black Sea grain deal

The Group of Seven (G7) economic powers called on Sunday for the extension, full implementation and expansion of a critical deal to export Ukrainian grain through the Black Sea, the group's agriculture ministers said in a communiqué.

Brokered by the United Nations and Turkey, the deal was signed in Istanbul last July, allowing Ukraine to export more than 27 million tons of grain from several of its Black Sea ports.

Russia has strongly signaled that it will not allow the deal to continue beyond May 18 because a list of demands to facilitate its own grain and fertilizer exports has not been met.

In the communiqué after a two-day meeting in Miyazaki, Japan, the G7 agriculture ministers recognized the importance of the deal, saying, "We strongly support the extension, full implementation and expansion of the Black Sea Grain Initiative (BSGI)."

"We condemn Russia's attempts to use food as a means of destabilization and as tool of geopolitical coercion and reiterate our commitment to acting in solidarity and supporting those most affected by Russia's weaponization of food," the communiqué said.

G7 members stand ready to support recovery and reconstruction of Ukraine, including by providing expertise in de-mining of agricultural land and reconstruction of agricultural infrastructure, the document said.

Russian Foreign Minister Sergei Lavrov is scheduled to discuss the Ukraine Black Sea grain export deal with UN Secretary General Antonio Guterres in New York.

 

Five key takeaways from the Russian jet-US drone incident

Two Russian jets sparked the latest diplomatic crisis between Moscow and Washington on Tuesday when they forced down an unmanned American aircraft into the Black Sea.

The White House blasted the incident as unsafe and reckless, while Russia has downplayed the event, even accusing the US of provocative drone flights approaching Russian territory.

Charles Kupchan, a senior fellow with the Council on Foreign Relations, called it an extraordinary and worrying clash between Russia and the Western security alliance NATO.

“Whatever the intent of the Russians, this is a very dangerous situation,” he said. “On a daily basis we have Russian weapons and aircraft and personnel in close proximity to NATO territory, NATO personnel, NATO platforms. And so the risk of escalation is significant.”

Here are five key takeaways from the downed drone.

Airspace interceptions aren’t new, but this was rare

The US intercepts Russian fighter jets several times a year in the Air Defense Identification Zone that covers international airspace outside of the US and Canada. That includes the interception of four Russian fighter jets near Alaska last month.

There have also been interceptions of US and NATO aircraft by Russian planes in the Black Sea in recent years. But the drone attack was particularly concerning for Washington, which said the MQ-9 Reaper drone was flanked by two Russian jets before one Russian jet dumped fuel on the drone.

A Russian jet then damaged the propeller of the drone and forced it down into the Black Sea.

National Security Council spokesperson John Kirby said the attack of a US drone was especially alarming compared to previous interceptions.

“This one obviously is noteworthy because of how unsafe and unprofessional it was,” Kirby told reporters on Tuesday.

Neither the US nor Russia has recovered the drone

The $32 million dollar drone may never be recovered.

Speaking to CNN on Wednesday, Kirby said the drone plunged into very deep water, and US officials are determining whether recovery efforts are possible.

But Russia is pushing forward to recover the aircraft, according to Nikolai Patrushev, the secretary of Russia’s Security Council.

“I don’t know if we can recover them or not, but we will certainly have to do that, and we will deal with it,” Patrushev said on Russian television Wednesday, according to The Associated Press.

Kirby said the US has taken steps to protect the information and data the drone has to limit intelligence collection from Russia.

Russia accuses US of provocation

Russia claims the US drone maneuvered sharply and crashed into the Black Sea on its own.

The Russian Defense Ministry also slammed the US for operating near the region of Crimea, which Moscow illegally annexed from Ukraine in 2014 — but which the US refused to recognize as Russian territory.

Russian Ambassador to the US Anatoly Antonov told reporters Tuesday, after being summoned to the State Department, that the drone was moving deliberately and provocatively towards the Russian territory.

“The unacceptable actions of the United States military in the close proximity to our borders are cause for concern,” Antonov said. “We are well aware of the missions such reconnaissance and strike drones are used for.”

US says it will continue patrols

The US has operated reconnaissance missions over the Black Sea for more than a year, predating Russia’s invasion of Ukraine.

Defense Secretary Lloyd Austin said the US will not be deterred by the incident.

“Make no mistake, the United States will continue to fly and to operate wherever international law allows,” Austin said on Wednesday.

Fears of escalation persist

Tensions between the US and Russia have reached the highest point since the Cold War, rising after Russia’s invasion of Crimea in 2014, escalating further after Russia’s interference in the 2016 election and then skyrocketing after Moscow’s full invasion of Ukraine last year.

The US and Russia maintain a crisis communication line to deal with incidents such as the drone attack, but Moscow has not picked up the phone at some critical moments during the war in Ukraine.

Kremlin spokesman Dmitry Peskov on Wednesday  described the relationship between Moscow and Washington as at its lowest point, although he said Russia would continue to engage in diplomacy.

“Russia has never rejected a constructive dialogue, and it’s not rejecting it now,” Peskov said.

 

 

 

 

Oil tankers passing Turkish straits face delays

According to a Reuters report, at least 20 oil tankers queuing off Turkey to cross from Russia's Black Sea ports to the Mediterranean face further delays as operators race to adhere to new Turkish insurance rules added ahead of a G7 price cap on Russian oil.

Turkish maritime authorities issued a notice in November 2022 asking for additional guarantees from insurers that the transit through the Bosphorus would be covered starting from the beginning of December 2022.

The new rule was announced before a US$60 per barrel price cap was imposed on Russian seaborne crude. Western insurers are required to retain proof that Russian oil covered is sold at or below that price. The industry has a 90-day grace period to comply with the G7 plan.

"Extra coverage from Russian P&I seems to be the way out for tanker operators," the shipping source said, referring to protection and indemnity insurance providers.

We'll see further delays if owners (or) operators can't provide the required guarantees."

Norway's Skuld, among the top tier of P&I clubs, said such insurers cannot provide the level of detail that has been required.

"The Turkish government's requirements go well beyond the general information that is contained in a confirmation of entry letter," Skuld said in a note.

Millions of barrels of oil per day move south from Russian ports through Turkey's Bosphorus and Dardanelles straits into the Mediterranean.

The shipping agency GAC said on Tuesday that 13 vessels were waiting to transit the Bosphorus strait southbound, all of them oil tankers and 10 of them holding Kazakh crude after loading at the Russian port of Novorossiisk.

One tanker which loaded oil at the port cleared the straits over the weekend after providing proof of insurance. Coverage for the Liberia-flagged Vladimir Tikhonov tanker came from Russian insurer.

Only two vessels were scheduled for departure on Tuesday, both coming from Russia.

Tribeca shipping agency said nine oil tankers were waiting to transit the Dardanelles southbound on Tuesday.

GAC also said that average waiting times southbound at the Bosphorus on Tuesday was four days for vessels longer than 200 meters, up from one day in mid-November.

For the Dardanelles strait, average waiting times southbound were also around four days, up from 1-1/2 days in mid-November, Tribeca said.

Black Sea agri-bulk exports fall 35% in April 2022 due to Ukraine war

Assessing the impact of the conflict on exports S&P Global Market Intelligence said total seaborne agri-bulk shipments from the Black Sea region in April fell 35% year-on-year to 4million tons.

Shipments of corn and barley from the Black Sea area were hard hit, down 76% to 891,000 tons, and down 82% to 65,000 tons respectively. However, wheat shipments were reported to be up 44% at 3million tons.

S&P noted that Black Sea agri-bulk shipments declined to almost all import regions and territories in April including North Africa, Middle East, Northwestern Europe, Japan, Korea, Taiwan, mainland China, Southeast Asia and West Africa. The only region to see a rise in shipments was the Mediterranean, with an increase in agri-bulk exports from the Black Sea region of 15% to 1.2m tons

A report issued this week by insurers Allianz Global Corporate & Specialty (AGCS) highlighted that the biggest impact of the war on shipping so far had been on vessels trading to the Black Sea and Russia, with Ukraine’s major ports, including Odessa closed by a Russian blockade. The insurer noted that Ukraine moves 70% of its exports by sea and some 99% of its grain exports are moved by ship.

With the war in Ukraine increasingly looking to be a drawn out conflict there could be further negative impact on agri-bulk exports.

Pranay Shukla, Associate Director at S&P Global Market Intelligence said, “There could also be further significant downside risks to the Black Sea agri-bulk forecast for this year depending on how long the war extends and if Ukraine can manage its exports from Romania and Poland, while upside risks could arise from Russian wheat exports on expected strong domestic wheat harvest.”

S&P currently forecasts that agri-bulk shipments from the Black Sea region will decline 37% year-on-year to 11.2, tons in the second quarter of 2022, and by 20%YoY to 83.9 million tons for the full year in 2022.

“The insurance industry is likely to see a number of claims under specialist war policies from vessels damaged or lost to sea mines, rocket attacks and bombings in conflict zones,” explained Justus Heinrich, Global Product Leader, Marine Hull, at AGCS. Insurers may also receive claims under marine war policies from vessels and cargo blocked or trapped in Ukrainian ports and coastal waters.

 

British-Russian Naval Confrontation

A Minister said that Britain was prepared to sail naval vessels through disputed waters near Crimea again, a day after a confrontation between a British warship and Russian forces in the Black Sea.

Environment Secretary George Eustice disputed claims from Moscow that Russian warplanes dropped bombs and a patrol boat fired warning shots at a British destroyer it claims entered into its territorial waters in the Black Sea.

"This is a very normal thing," Eustice told Sky News. "It's quite common, actually, what was actually going on is the Russians were doing a gunnery exercise and given prior notice of that, they often do in that area. So I think it's important that we don't get carried away."

Russia said HMS Defender went three kilometers inside its territory off Cape Fiolent in Crimea, just before noon on Wednesday. A nation's territorial waters extend 12 nautical miles from its coastline; any foreign warship going past that limit would need permission of the country to do so, with a few exceptions.

Russia annexed Crimea from Ukraine after a military intervention in the region in 2014. The international community opposed that annexation, and still considers Crimea as Ukrainian territory.

Eustice insisted the vessel was making a legal passage under international law to Georgia via Ukraine. Asked if the UK would sail through disputed Ukrainian waters again, he replied: "Yes ... because we never accepted the annexation of Crimea."

On Thursday, Kremlin officials accused the UK of a "deliberate, planned provocation" and said it had the right to "bomb on target" when foreign ships violate its sea borders.

Kremlin spokesman Dmitry Peskov said on a conference call with journalists that Russia is "obviously concerned about such actions of the British ship."

"What can we do? We can appeal to common sense, demand respect for international law. If this does not help, we can bomb not only in the direction, but also on target, if our colleagues do not understand," Russian Deputy Foreign Minister Sergey Ryabkov said, according to Russian state media TASS.

On Thursday, British Foreign Secretary Dominic Raab described Moscow's version of Wednesday's incident as "predictably inaccurate," saying "no shots were fired at HMS Defender."

A BBC reporter on the ship said he witnessed Russian warplanes and naval vessels buzzing the destroyer during the flare-up on Wednesday.

Shortly after the British ship crossed the territorial boundary, an Su-24M attack jet dropped bombs and a coastal patrol ship fired warning shots in front of the British destroyer, the Russian Defense Ministry said in a report.

The UK Defense Ministry had previously denied Moscow's accusation, saying that its ship was making a legal and innocent passage.

The UK ambassador to Moscow was due to visit the Russian Foreign Ministry Thursday after being summoned over the incident, spokeswoman Maria Zakharova said on state TV. On Wednesday, Zakharova accused the UK of spreading lies about the incident.

"So, who's lying: the British Defense Ministry, the British BBC reporter or the British Embassy in Moscow? There is an answer. This time -- the British Defense Ministry and the British Embassy ... London has lost its manners. I advise the British partners to knock if they want to 'peacefully enter' next time," Zakharova wrote on Telegram.