Mounting tensions between Ukraine and Russia in the Black Sea shipping lanes have started to drive up war risk insurance rates.

The market initially did not respond to the Ukraine attack on the 6,616-dwt Russian tanker Sig (built 20214) and drone attacks on the Danube ports of Izmail and Reni earlier this month.

But, higher rates have now started to seep through.

Some underwriters have pushed up Black Sea tanker rates to Russia from 1% to 1.25% of insured values, although some mutual providers are keeping rates closer to 1%.

The higher rates are generally being applied to the Russian oil and oil products tanker trades.

There are limited providers for the small ship trade to the Ukraine Danube ports, but some rates are being offered up to 2.5%.

War risk rates as high as 5% were recorded during the outbreak of hostilities in February 2022.

As reported by TradeWinds, Russia stepped up drone attacks on Ukrainian granaries, both in Odesa and by the Danube early on Wednesday.

The attacks were an attempt to destroy what was left of the war-torn country’s grain trade and take out more than a tenth of its export capacity.

Drone attacks

Drones taking off from the Russian-occupied Sea of Azov have also hit civilian infrastructure at Odesa, according to the Ukrainian military.

Insurance broker Marsh is working with the London marine insurance community to come up with a scheme to insure ships under a new plan to export grain from Odesa.

The initiative is being developed to replace the Black Sea Grain Initiative.

The insurance scheme involves the Ukraine state underwriting a large portion of the risk.

It follows the safe passage of the 9,400-teu container ship Joseph Schulte (built 2014) out of the port of Odesa last week.