Key facts
- Black Sea oil shipping insurance costs have risen to $2.5 million per vessel.
- The increase represents a 12.5-fold surge in quoted insurance costs.
- Attacks on vessels and port infrastructure are cited as reasons for the rising risks.
- Two commercial vessels were struck by drones in Bulgaria's exclusive economic zone on October 6.
- Bulgaria's Burgas refinery has continued receiving crude shipments without cancellations.
- Restrictions on diesel exports from Bulgaria's refinery could reduce production of other petroleum products.
Insurance costs for oil tankers navigating the Black Sea have dramatically increased, climbing from approximately $200,000 to $2.5 million per vessel in recent months. This surge, according to Evgeni Simeonov, Lukoil's special commercial manager in Bulgaria, is a direct reflection of the escalating risks to commercial shipping following a series of attacks on vessels and port infrastructure.
Simeonov told Bulgarian National Television on Monday that the 12.5-fold increase in insurance premiums translates to an additional $2.3 million per vessel. These rising costs are expected to put further pressure on crude transportation expenses and, consequently, on fuel prices within Bulgaria.
In September, London's marine insurance market broadened its high-risk reporting requirements to encompass the entire Black Sea basin. However, voyages within the territorial waters of Bulgaria, Romania, Georgia, and Turkey are exempt from these notification mandates. War-risk premiums alone were reportedly adding hundreds of thousands of dollars to the cost of seven-day voyages.
The threat has extended into Bulgaria's exclusive economic zone, with drones striking two commercial vessels on October 6. The Togo-flagged Alfa Watan sank, while the Palau-flagged Able sustained damage. All 18 crew members aboard the Able were rescued, according to the Associated Press. Bulgarian authorities have not yet identified the perpetrators of these attacks. The sinking of the Alfa Watan prompted Syria to call for an independent investigation, as ten crew members, including nine Syrians, went missing.
Shipping costs were already on an upward trajectory before the October incidents. In August, Bloomberg reported that daily tanker earnings on the Novorossiysk-to-Augusta route had reached a record $440,948 for 135,000-ton crude shipments, a 140% increase since early July.
Despite the heightened risks, Bulgaria's Burgas refinery has continued to receive crude shipments, with Simeonov confirming no cancelled deliveries and secured supplies through early December. He also defended Bulgaria's decision to lift restrictions on diesel exports, arguing that preventing the refinery from selling surplus production abroad could lead to reduced crude processing due to full storage facilities. Simeonov noted that the refinery produces more diesel than Bulgaria consumes, and export restrictions could consequently impact the production of gasoline, aviation fuel, and other petroleum products.