In fact, the current high prices are discouraging buyers and unless prices move lower, and global production increases, we do not see much change in the supply/demand situation in the short-term. The fundamentals of the crude tanker market have, however, not changed. The mainstay of the Russia trade, Aframaxes, have naturally been the main beneficiary of events and earnings are, according to Clarkson, now five times higher than earlier in the year Though not involved in Russia trade, VLCC’s initially also saw some much-needed improvement, however, earnings have since slipped back towards pre-war levels. Still, Baltic Exchange rate indices for most vessel types and sizes are up due to rocketing rates out of Russia. Compared to the three weeks before the war, volumes are down 30%. Volumes of crude oil and products export from Russia are sharply down since the beginning of the war. Particularly iron ore and grain shipments are unseasonably low whereas coal shipments so far seem unimpacted by the higher commodity prices.Ĭrude tanker fortunes improve on high rates ex Russia The increase is approximately 5 percentage points lower than what we have seen during the same period in previous years. Ukraine’s exports remain at a standstill whereas global volumes have increased only marginally compared to the early 2022 average. The reductions appear equally spread across ports, vessel sizes, and commodities although coal out of the Russian Far East appear to be mostly unaffected. Volume wise, Russia’s exports have, unsurprisingly, moved lower week by week since the invasion, and three weeks later were about 25% lower than the 2022 pre-war average. Not included in the BDI calculation, the Handysize index (BHSI) has seen the sharpest rise of all at some 400 points above pre-war level. Since then, there has been a downward correction as the Capesize index (BCI) has moved back to a level lower than pre-war. Immediately following Russia’s invasion of Ukraine, Baltic Exchange indices for bulk vessels moved lower but two weeks into the war the Baltic Dry Index (BDI) had recouped losses and moved higher as had the size specific indices. Global economic growth must therefore be expected to be significantly lower than the 4.0-4.5% forecast before the war. Especially Europe is expected to see lower growth than previously forecast.Ī broad-based pick-up in bulk freight rates Hunger must be expected to increase in fragile developing economies that have yet to recover from the impacts of COVID.Īcross the world, we will see discretionary spending reduce as businesses and consumers attempt to cope with increasing food and energy prices. The war’s full impact on the global economy naturally remains unknown, however, prices for energy and agricultural commodities remain elevated and a global food crisis appears unavoidable. In any case, we continue to believe that the sanctions currently crippling the Russian economy will remain in place long after the war ends. How much longer Ukraine can resist is however uncertain, as is the outcome of ongoing ceasefire and peace talks. It is also becoming clear that Russian military forces have not been successful in quickly overwhelming Ukraine’s defences. Before United States President Joe Biden left for meetings with European partners in Brussels and Poland, the White House advised that Biden expected to announce further sanctions while in Europe. Four weeks after Russia’s invasion of Ukraine, a few things have become clearer, but much uncertainty remains.įurther sanctions have been imposed on Russia, including the US banning Russian energy imports, and more are about to come.
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