The footprint of President Vladimir Putin’s war on Ukraine is growing fast after a weekend in which sea drones crippled a Russian naval vessel and oil tanker.
The footprint of President Vladimir Putin’s war on Ukraine is growing fast after a weekend in which sea drones crippled a Russian naval vessel and oil tanker.
For the first time, the attacks put at risk Russia’s commodity exports via the Black Sea, a route that accounts for most of the grain and 15 per cent to 20 per cent of the oil that Russia sells daily on global markets.
Significantly higher insurance and shipping costs are likely to follow for Moscow, but there are risks to European and global markets, too.
The expansion comes as Ukraine’s counteroffensive advances more slowly than Kyiv officials planned, and as Saudi Arabia’s attempt to catalyse peace talks by hosting a multinational conference showed just how hard it is likely to be to end the bloodshed on terms both sides can accept.
“We’re in an escalation phase now and the situation is unpredictable,” said Alexander Gabuev, who heads the Russia Eurasia Center of the Carnegie Endowment for International Peace, a Washington think tank.
“Since the start of its counter-offensive, Ukraine has been trying to deliver a message to the Russian elites and population that the war can strike into their territory,” Gabuev said. Now it “is trying to target Russian critical infrastructure, including sea routes in the Black Sea that are vital for Russian exports”.
Although the extent of this escalation and its consequences are for now unclear, they may become significant and hit non-Russian economic interests as hard as Moscow’s, if not Ukraine’s.
“Freight rates will be ballooning next week as the risks of carrying anything across the Black Sea proliferate,” said Viktor Katona, head crude analyst at market intelligence firm Kpler Ltd. The cost of shipping Russian crude from Novorossiysk to the west coast of India could rise by as much as 50 per cent, he said.
