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The proposed EU curbs could reverse the trend.

The availability of tankers in late May and early June allowed for a further reduction in freight rates from Russian oil to India. However, this trend could reverse itself if the proposed price cap by Europe is implemented.

The European Union proposed a new sanctions package against Russia for its actions in Ukraine, and suggested that the price cap of Russian crude oil be lowered from $60 per barrel to $45 per barrel by the Group of Seven.

The G7 and EU imposed a $60 cap on Russian crude oil by the end of 2022. This would restrict access to Western shipping services and insurance for purchases above the limit in an effort to reduce Moscow's revenue.

As the price of Russia’s flagship Urals oil has dropped below the cap, Western owners have been able return to the Russian oil market.

Since early April, the price of Urals crude oil in Russian ports has stabilized below $60 per barrel. This allows more Western shipping companies to resume services, especially Greek shipping companies. It also increases tanker availability, which puts pressure on freight rates.

On Wednesday, the price of Urals oil shipped from the Baltic Sea Port of Primorsk stood at $54.72 per barrel.

Costs of shipping Urals oil to India from Baltic ports including Ust-Luga have fallen to $5.5-$5.7 million, down from an average $6-million-per-one-way shipment in April-May and $8-million in early March.

After the new round of U.S. energy sanctions announced in January, Russian crude shipping prices rose dramatically. Russian oil sellers had to find new tankers to replace the ones that were hit by sanctions.

The freight rates are still higher than in January when shipping Russian crude oil from the Baltic ports into India cost between $4.7 and $4.9 per shipment. Reporting by

(source: Reuters)