Naval Drone Strikes Will Likely Slow Russian Oil And Grain Exports

By Áine Quinn (Bloomberg) Ukraine attacked an oil tanker it said was supplying Russian forces and warned that ports, including commodity hubs, may be at risk in the latest escalation in the area around the Black Sea. 

The incident “will very likely slow down traffic to and from Russian Black Sea ports,” said Vasilis Mouyis, the joint managing director of Greece-based Doric Shipbrokers SA.

The hull of the tanker was pierced after an attack by a sea drone in the Kerch Strait, Russia’s Federal River and Marine Transportation Agency said on Telegram. There were no casualties and the vessel is still afloat, the agency said. Ukraine’s state security service was responsible for the drone strike, according to a Ukrainian official familiar with the matter. 

Also Read: Ukraine Attack on Russian Warship Disrupts Oil and Grain Export Hub

The attack — the first case of a vessel carrying commodities in the Black Sea being targeted by Kyiv’s forces — highlights a new phase in the conflict since Russia exited a grain deal last month and sought to cripple Ukraine’s ability to export the commodity. Kyiv has threatened commensurate action against Russia and the flow of raw materials through the key shipping route is increasingly at risk.

War Risk Ports

Ukraine’s state sea and river transport service announced that six Russian ports — including commodity hubs Novorossiysk, Tuapse and Taman — would be part of the “war risk area” until further notice. That followed the closure for several hours of the Novorossiysk port in the Black Sea on Friday, after a Ukrainian drone attack on a naval vessel. 

Ukraine's Navy declared 6 russian ports on the Black Sea a "war risk area", inc Novorossiysk.

Port of Novorossiysk accounts for up to 30%(!) of russia's seaborne exports of crude #oil.
This volume goes mostly to Turkey and South Europe. pic.twitter.com/iqtdX2ktZs

— Evgen Vorobiov ?? (@vorobyov) August 5, 2023

Another sea drone was destroyed near Sevastopol on the Russia-occupied Crimean Peninsula on Saturday, which temporarily disrupted navigation in the area, according to the TASS news service. Last month, explosions damaged the Kerch Strait bridge which links Russia-annexed Crimea to Russia’s Krasnodar region.

Ukraine is trying to counter Russia’s efforts to control the flow of traffic in the Black Sea, said Mykola Bielieskov, a research fellow at the National Institute for Strategic Studies. 

1/The attack on SIG represents an escalation in the war on the #BlackSea with Ukraine targeting a Russian commerical tanker near the Kerck Strait.

And no, this is not one of the newest and biggest tankers but designed for the Black Sea/Med trade. https://t.co/YYjXn4Lw0x

— Sal Mercogliano (WGOW Shipping) ???????? (@mercoglianos) August 5, 2023

“Ukraine should create a symmetry of risks, so that it would be possible to come to Moscow and say, ‘If you want to trade from Novorossiysk, then allow us to ship grain from Odesa and other ports.’” Bielieskov said.

Commercial ships were continuing to pass through the Kerch strait as usual on Saturday after the attack on the oil tanker, according to people familiar with the matter who asked not to be identified discussing sensitive matters.

Naval Escalation

Any damage to Russian ships or the Kerch Strait bridge “are an absolutely logical and effective step in relation to the enemy,” Ukraine’s state security service chief Vasyl Malyuk said on Saturday. He did not confirm whether the Russian oil tanker had been hit by Ukraine.

The vessel, called the ‘Sig,’ was being assisted by two tug boats after its engine compartment was damaged, the River and Marine Transportation Agency said. 

The Sig has been sanctioned earlier by the US for participating in a “sanctions evasion scheme” to supply jet fuel to Russian forces in Syria, according to a statement from the US Treasury’s Office of Foreign Assets Control. 

"Former Russian President Dmitry Medvedev suggested Moscow would launch more strikes against Ukrainian ports in response to Kyiv’s attacks on Russian ships in the Black Sea, and threatened to hand Ukraine “an ecological catastrophe.”https://t.co/vdxXTJSqeC

— gCaptain (@gCaptain) August 5, 2023

Ships sail from the Black Sea through the Kerch strait to the Sea of Azov and onward to ports in Russia and parts of Ukraine that are occupied by Russia. Kavkaz anchorage on the Kerch strait is key for Russian exports of grains, while Russia ships commodities from oil to fertilizers and coal through the Black Sea. Russia had already restricted navigation through the strait.

“International ship owners are mostly apprehensive,” Doric Shipbrokers’ Mouyis said. “Next week should give us more clarity as to how many are willing sign up new business to and from these ports right now.” 

By Áine Quinn, With assistance from Eduard Gismatullin and Shiyin Chen. © 2023 Bloomberg L.P.