Black Sea tanker insurance costs soar to $2.5 million

The cost of insuring ships transporting oil through the Black Sea has risen sharply from around $200,000 to $2.5 million per vessel in recent months. This makes the transportation of crude oil more expensive and puts additional pressure on fuel prices in Bulgaria, Evgeni Simeonov, the special commercial manager of "Lukoil" companies in our country, told BNT.

He said the increase reflected the growing risks to commercial shipping after repeated attacks on ships and port infrastructure. These amounts represent a 12.5-fold increase in insurance costs, equivalent to an additional $2.3 million per ship, Simeonov said.

The London Marine Insurance Market already expanded its reporting requirements for activity in high-risk areas of the Black Sea in September to cover the entire basin. Voyages in the territorial waters of neighboring countries - including Bulgaria, Romania, Georgia and Turkey - remain outside the scope of the notification requirements. Reuters reported that premiums to cover military risks add hundreds of thousands of dollars to the cost of seven-day courses.

The threat also extends to Bulgaria's exclusive economic zone. On October 6, drones struck two merchant ships, sinking the Togolese-flagged tanker "Alfa Watan" and damaging the Palau-flagged "Able". All 18 crew members of the "Able" were rescued. Earlier today, two more cargo ships were hit by drones in the Black Sea in Bulgaria's exclusive economic zone, sinking one of them.

Shipping costs were rising even before the attacks in October. In August, Bloomberg reported that the reference daily earnings of tankers on the Novorossiysk - Augusta route had reached a record $440,948 for the transport of 135,000 tons of crude oil. This figure has increased by 140% since the beginning of July.

The "Lukoil" refinery in Burgas continues to receive crude oil supplies. Simeonov said yesterday on BNT that there were no canceled deliveries at the site and that quantities were secured for work until the beginning of December. He also defended Bulgaria's decision to lift restrictions on diesel exports, arguing that if the refinery is prevented from selling excess output abroad, it could be forced to reduce crude oil processing as storage facilities fill up.

Simeonov said the refinery produces more diesel than Bulgaria consumes, and that restrictions on diesel exports could consequently lead to a reduction in production of gasoline, jet fuel and other petroleum products.