The Russia-Ukraine Refresh

Jul 26, 2022

A new shipping agreement was a ray of hope on Russia and Ukraine’s troubled waters. But it was quickly dimmed by a port city provocation.

A-boat time: Turkish and UN mediation over two months of talks led to agreement for safe passage in and out of Ukrainian ports. The ports have been blocked since the war began on February 24th, which has stagnated grain exports.

The dollars: Ukraine says they have $10B in grain for sail. And 60M tonnes of grain are expected to be exported in the next 8-9 months. Pre-war levels were 5M tonnes a month.

The war-related blockage and sanctions have driven 47M people into acute hunger. Russia denies responsibility and points the finger at Western sanctions and Ukrainian port approach mines.

The damage: Less than 24 hours after reaching the safe passage agreement, Russian missiles struck the port city of Odessa, drawing condemnation from global leaders and leaving questions about Russia’s commitment to the deal. The missiles didn’t hit the port’s grain storage area.

Where this goes: In the aftermath, many questions remain—including how grain movement will be facilitated by insurers and executed by carriers.

Insurance underwriters are on uncertain seas awaiting additional details of how the brokered deal will work. The Lloyd’s Market Association has marked Ukrainian waters as a high-risk zone, requiring approval from underwriters.

Soundbite: “The will is there for this humanitarian initiative, but underwriters cannot give any idea of the sort of cover or prices until they know more,” said one insurance source.