The unexpected missile attack on Panama-registered Pollux, which loaded crude at the Sheshkaris oil terminal in the Russian port of Novorossiysk on January 24 and was scheduled to deliver the medium, sour Urals grade to Paradip port on February 28, has queered the pitch for Indian purchases of Russian crude, the country’s biggest oil supplier, according to Paris-based market intelligence agency Kpler.
The last signal from Pollux was 18 hours ago from the waters near Somalia, moving towards India, according to Kpler data. State-run refiner Indian Oil has a 300,000 barrels per day refinery at Paradip, with Russian state-owned Rosneft being the oil supplier, Kpler data shows.
A Mumbai-based refining official said there were no frantic calls from suppliers and no panic in the market on Saturday. Russian oil is still crossing the Suez, he added.
This was the second such attack in less than three weeks on a Russian oil vessel. Late last month, the Achilles, a crude oil tanker managed by India’s Gaurik Ship Management, was sailing to Sikka on India’s west coast carrying Russian Urals when it was attacked. The missile missed the vessel, and ship-tracking data shows that the cargo was delivered on February 1 at Jamnagar oil terminal.
“It is likely that the Houthis have no intention of attacking non-Israeli related commercial shipping and that this was a one-off,” said Tilak Doshi, a London-based energy expert with decades of experience. “It is not in their interest to do so, as their benefactors in Iran — allied to Russia and China in global geopolitics — do not gain by such actions either. ‘’
The Houthis continue to target Israeli, American, and British-linked shipping in the Red Sea and the Gulf of Aden. So far in February, they have targeted five vessels, including Pollux, according to UK-based Ambrey, a maritime security agency. Pollux had minor damage from the attack, Ambrey said.
Russia has good relations with Iran and can manage the Iran-backed Houthi rebels, said a state-run refining official. Government officials said that India’s support for Israel had turned the Hamas and the Houthis against India, a reason why they were targeting ships employing Indians and carrying goods to India. India has since tried to strike a balance in the Israel-Palestinian conflict.
An industry official said some tankers, including Russian, carrying crude to India via the Suez do not show their destination as India. But the Houthis are also looking at vessel ownership, and not just where they are headed, he added.
Affiliations with mainland China, Iran, and Russia have not completely negated attacks either, Ambrey said, referring to attacks on Achilles and a container ship owned by a Chinese company.
But the uncertainty is taking its toll on freight costs and insurance, which may make Russian oil uncompetitive unless Moscow absorbs the higher costs and maintains existing discounts of $3-$4 per oil barrel, a state-run refining official said.
If the attacks continue, Russian vessels may have to go around the Cape of Good Hope, increasing transit time by weeks and sending costs north, Indian refining officials said, expecting Moscow to intervene with Tehran to sort the issues.
For all cargo types, the decision to take longer, safer routes has resulted in higher trade costs for shipping and insurance, according to the UN Conference on Trade & Development (UNCTAD).
The incremental cost of diverting a tanker around Africa costs nearly US$1mn more per voyage. For an Aframax tanker, similar in size to an LR2, costs surged by 110 per cent, according to LSEG Shipping Research.
