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Black Sea shipping traffic slowing after Russia, Ukraine warnings

The number of ships looking to pick up grain cargoes from the Black Sea area has fallen 35% this week versus the previous week with growing uncertainty over whether commercial traffic could be hit as Russia continues to pound food facilities in Ukraine.

Moscow’s direct attacks on Ukraine’s grain for four days running followed a vow by Kyiv to defy Russia’s naval blockade on its export ports following Moscow’s withdrawal earlier this week from a UN-brokered safe sea corridor agreement.

Russia said it would deem all ships heading for Ukrainian waters to be potentially carrying weapons from Thursday, in what Washington called a signal it might attack civilian shipping. Kyiv later responded by issuing a similar warning about ships headed to Russia.

“We believe the aggressive rhetoric is likely to lead to a reduction in owners willing to traffic in the region and creates further complexity with respect to insurance availability,” Jefferies analyst Omar Nokta said in a shipping note on Friday.

The number of dry bulk vessels ranging from the smaller handysize to supramax sized ships that were positioning themselves to transport grains from the Black Sea region dropped 35% this week versus the previous week, according to analysis from maritime and commodities data platform Shipfix.

The data showed that only 20 vessels were marketed for forward business for the rest of July into early August, compared with 32 vessels sought the previous week.

Many insurers have now suspended providing cover for shipments from Ukraine apart from the smaller ports along the Danube, insurance industry sources said on Friday.

“The big question is the safety of Danube ports going forward,” one source said.

There were dozens of ships waiting to pass through the Danube channel on Friday including vessels bound for Romania or leaving from there, according to data from analytics company MarineTraffic.

Additional war risk insurance premiums, which are charged when entering the Black Sea area, need to be renewed every seven days.

They already cost thousands of dollars and are expected to go up, given also the risk of floating mines.

War risk cover for Russia’s Black Sea ports was still available on Friday with little change in rates for now, insurance sources said.

Russia’s defence ministry on Friday said its Black Sea fleet had practised firing rockets at “floating targets” and apprehending ships. Moscow’s ambassador to Washington denied any plan to attack ships.
Source: Reuters (Reporting by Jonathan Saul; Editing by Sharon Singleton)

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