FOR clues on how toxic Russian oil has become, look no further than the trade for tankers that export it.

It costs US$3.5mil to hire a tanker to deliver a million barrels to Italy from Russia’s Black Sea port of Novorossiysk - a voyage that should take no longer than a week.

That’s a more-than 300% gain from before the invasion of Ukraine began.

It also assumes traders can find an owner willing to risk letting their ship enter a region where five merchant ships have been blown up in the week since the attack started, and where the North Atlantic Treaty Organisation has warned of an increasing risk of collateral damage to vessels.

There’s no legal impediment to collecting the nation’s supply, but oil and shipping markets are twisting on one huge uncertainty:

Could governments sanction Russia’s energy exports in what would be the most aggressive legislative response possible to the attack? Until there’s a definitive answer, some tanker owners will be reluctant to transport the barrels, and some refineries will look elsewhere for supply.

That’s left oil traders being careful too. On Wednesday, Russian oil producer Surgutneftegas PJSC failed to award tenders - for an unprecedented third time - to sell about 6½ million barrels of Urals crude. Since the war began, offers to sell the grade at record discounts on a pricing window run by S&P Global Platts have elicited no bids. It increasingly amounts to an embargo in all but name.

On Thursday, Trafigura offered the grade at a US$22.70 a below the Platts benchmark Dated Brent, surpassing by about US$4 the previous record discount offered. Again, there were no bids.

“Russian energy flows, in theory, are not sanctioned but everyone is hedging their bets for now,” said Anoop Singh, head of tanker research at Braemar ACM Shipbroking Pte.

Rates to ship Russian crude to Europe from the Black or Baltic seas, the nation’s two main western outlets, now cost about 291 and 516 industry-standard Worldscale points, showed Baltic Exchange in London. Both were below 100 points before the attack.

The figures equate to current daily earnings of about US$150,000 and US$241,000 a day respectively from the two areas - multiples higher than prior to the invasion.

In Asia, the cost of hauling Russia’s Eastern Siberia Pacific Ocean crude to China soared more than 80% on Thursday compared with a week earlier, according to Baltic Exchange data. An aframax that can typically carry about 600,000 barrels was booked this week to load from the Russia port of Kozmino from March 10-12 at about US$875,000 , according to shipbrokers and fixtures seen by Bloomberg.

While wider tanker markets initially tracked rates for Russia-related trades higher after the invasion, there were signs of a thawing as of Thursday morning, said shipbrokers in Europe.

 - Bloomberg