Cargill Confirms Chartered Vessel Hit by Attack in Black Sea as Ukraine-Russia Crisis Continues
Despite signs Russian President Vladimir Putin may be ready to talk with representatives from Ukraine, the escalating crisis in Ukraine had commodity markets on edge Thursday. Cargill also confirmed a ship it chartered was hit in the Black Sea.
According to Bloomberg, the Cargill chartered ship sailing in Ukrainian waters was caught in an attack in the Black Sea. Bloomberg reports the vessel is currently sailing south to Romanian waters to receive assistance, but the vessel was empty.
“The vessel and all crew are safe and accounted for,” Cargill said Thursday in a statement. The vessel was empty when the incident occurred, the company said.
Bloomberg reports the attack is the first confirmed instance of physical damage related to commodity trading in the region. Cargill accounts for 25% of all United States grain exports.
Dan Basse of AgResource Company says the escalating situation Thursday put more prominence on U.S. farmers' need to supply the world with agricultural goods.
"It's really a realignment of world trade," says Basse. "What we don't know about, of course, is the sanctions. The Russians have also threatened that if another country were to blockade the Bosphorus, which is the feeder of all the grain coming down, that they would take actions against that country. So there's a lot we don't know yet. But when you think about 31% of world, we trade being domiciled in Ukraine and Russia, 30% of world barley trade, and then somewhere around 29% of 'sun oil' trade, it's a really big deal."
The war zone means insurers have raised the cost of providing cover for merchant ships through the Black Sea, which is adding to soaring rates to transport goods through the region for vessels still willing to sail.
Reuters reports despite ship owners already paying war-risk insurance, ship insurers have quoted the additional premium rate for seven days at anywhere between 1% to 2% and up to 5% of insurance costs, from an estimated 0.025% on Monday before Russia's invasion began, according to indicative rates from marine insurance sources. As a result, this could mean additional costs of hundreds of thousands of dollars for a ship voyage depending on the destination.
According to Reuters, the situation seemed to be taking a positive step toward resolution on Friday. Russian President Vladimir Putin is ready to send a delegation to Minsk for negotiations with representatives of Ukraine, the Kremlin said on Friday after the Russian leader held a phone call with Chinese President Xi Jinping.
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