With today’s news of further Russian attacks on vessels, now within Bulgaria’s exclusive economic zone, I think attempts to forecast the situation in the Black Sea based on historical patterns of military risk assessment and precedents in the freight market have, unfortunately, stopped working.
Historically, insurance and freight markets have always found ways to adapt and establish a new balance between price and risk — whether in response to piracy, the Houthis, passage through the Strait of Hormuz or, closer to home, the escalation in the Black Sea. Since the escalation began, the market has managed to price in even a risk as costly as calling at the ports of Odessa.
I very much hope I am wrong, but unfortunately we have to acknowledge that the outlook for the Black Sea is now pointing in only one direction — downwards. It is impossible to price a risk when the rules and geographical boundaries disappear and the value placed on seafarers’ lives is effectively reduced to zero.
Moreover, Russia’s strategic objective of turning the entire Black Sea into one continuous high-risk area and effectively closing it to shipping also affects its own Black Sea ports and exports, which seems completely paradoxical. In Iran’s case, for example, the situation around the Strait of Hormuz is an all-or-nothing gamble for survival.
The same cannot be said of Russia.
