Black Sea Attacks Disrupt Global Grain and Oil Trade Flows

A surge in attacks on ships and ports in the Black Sea is disrupting global supplies of grain and oil. The region, shared by Russia and Ukraine among others, has become a new hotspot for trade disruptions.

Russia and Ukraine have intensified their attacks on each other's agricultural export facilities and commercial vessels in recent weeks. This escalation is adding to pressure points for commodity markets already struggling with disruptions elsewhere, such as the Middle East.

The conflict is affecting grain exports from Ukraine, which relies heavily on the Black Sea route for its shipments. According to the Ukrainian infrastructure ministry, the country recorded 35 attacks on vessels in port and 22 at sea in July, along with 67 strikes on port facilities. This has led to a significant decline in export capacity via the Black Sea, with losses estimated to be around one-third of usual levels.

The impact is also being felt in oil exports, as Ukrainian attacks on tankers have damaged several vessels and forced temporary suspensions of loading operations at Novorossiysk and the Caspian Pipeline Consortium (CPC) terminal. The CPC system is a critical export route for Kazakhstan, handling around 80% of the country's crude exports.

The rising security risks are driving up shipping costs, with average daily Black Sea oil tanker costs jumping to over $300,000 a day from just over $200,000 a week ago. War insurance costs for port calls to Black Sea terminals have also risen to as much as 2% of the value of the ship, from around 1% two weeks ago.