IFreight rates for Russian oil shipments from the Baltic ports to India eased further in the period from late May to early June, thanks to high tanker availability, but the trend may reverse if Europe's proposed lower price cap comes to fruition.
The European Union has put forward a new sanction package against Russia over Ukraine and proposed to lower the Group of Seven nations' price cap on Russian crude oil to $45 a barrel from $60 a barrel.
The G7 countries and the EU, imposed the $60 cap on Russian oil in late 2022, restricting access to Western shipping and insurance services for above-cap purchases in a bid to curb Moscow's revenues.
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However, as the price of Russia's flagship Urals crude has fallen below the cap, Western shipowners have been able to return to its oil market.
Urals crude price estimates in Russia's ports have stabilised below $60 per barrel since early April, allowing more Western shipping companies, primarily Greek, to resume shipping services, increasing tanker availability and putting freight rates under pressure.
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By Wednesday, the cost of Urals oil loaded from the Baltic Sea port of Primorsk was about $54.72 per barrel.
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The cost of shipping Urals oil from the Baltic ports, including Ust-Luga, to India fell to between $5.5 million and $5.7 million from about $6 million per one-way shipment on average in April and May, and about $8 million early in March.
Russian crude shipping rates rose sharply after a new round of U.S. sanctions on Russian energy interests unveiled in January took effect. Russian oil sellers were forced to look for new tankers to replace those hit by sanctions.
Freight rates still remain above levels in January, when the cost of shipping Russian crude from the Baltic ports to India was between $4.7 million and $4.9 million per one-way shipment.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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Inflation based on the wholesale price index (WPI) declined to a 14-month low of 0.39 per cent in May from 0.85 per cent in April on the back of a dip in food and fuel prices, according to the data released by the Commerce and Industry ministry on Monday. Price rise also decelerated in the manufactured products category, the data showed.
Prices of primary food articles (-1.56 per cent) declined for the second month in a row. The trend was led by a double-digit decline in the prices of vegetables (-21.6 per cent), pulses (-10.4 per cent), potato (-29.4 per cent) and onion (-14.4 per cent).
Protein-rich food like eggs, meat and fish declined by 1.01 per cent — the second month in a row. The price rise in cereals
(2.56 per cent), paddy (0.96 per cent) and wheat (5.75 per cent) decelerated during the month. Meanwhile, the price rise in other food items like fruits (10.17 per cent) and milk (2.66 per cent) accelerated during the month.
Fuel and power prices declined 2.27 per cent in May. The drop in global commodity prices, especially of mineral oils, led to a further decline in the prices of petrol (-8.5 per cent) and high-speed diesel (-5.61 per cent) for the 12th and 25th consecutive month, respectively.
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Cooking gas price, however, accelerated 0.25 per cent during May. The pace of price rise in manufactured products fell to 2.04 per cent in the month.
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The drop in WPI inflation comes days after India’s retail inflation moderated to a 75-month low of 2.82 per cent in May, aided by a double-digit dip in vegetable prices and the deepest decline in pulses prices in over six years.
Rajani Sinha, chief economist, CareEdge Ratings says that the outlook for food inflation has improved considerably with positive indicators such as favorable prospects for agricultural production due to above normal monsoon, recent reductions in basic customs duties on edible oils, and adequate reservoir levels expected to keep food prices in check.
“With the ongoing disinflationary trend in food prices as suggested by daily price data so far, the wholesale inflation is expected to stand at around 0.4 per cent in June. The conflict between Israel and Iran has added fuel to the global economic uncertainty which is already marred by tariffs-led volatility,” said Paras Jasrai, associate director, India Ratings.
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