Polar Code, improving US - Russia relations could boost Arctic shippingPolar Code, improving US - Russia relations could boost Arctic shipping

The NSR cuts the voyage between Europe and East Asia from 21,000 km via the Suez Canal to 12,800 km saving 10 – 15 days transit time. Of the four main A8rctic shipping routes to become ice-free.

Global warming and arctic oil and gas exploration had spurred ice class newbuilding orders, which peaked at 32 in 2013, however, the fall in the oil price and economic sanctions in Russia reduced the newbuildings ordered and voyages through the NSR.

Banchero believes there could now be renewed interest in the NSR with signals of a reversal of the trends seen since 2014.

“The introduction of the Polar Code on 1 January this year could potentially lead to a renewed spike in voyages as insurance coverage could now extend to Arctic Ocean sailings,” the brokers said in its weekly report.

“An easing of tensions between the US and Russia could also push several Russian crude oil production projects in the Arctic currently suspended because of the US sanctions, which could support tanker demand in these waters.”

New US President Donald Trump has signaled a normalizing of relations with Russia and has openly declared his admiration for Russian President Vladimir Putin.

According to Banchero Costa crude oil shipments from terminals along Russia’s Arctic coast have doubled since January 2015 reaching 250,000 barrels per day since June 2016.

“The new oil fields feeding Russia's Arctic terminals reached around 100,000 barrels per day in 2016, and could contribute more than 400,000 barrels per day by 2020 to Russia’s oil output,” the report said.

“Although this is only 4% of Russia's total production of almost 11m barrels per day, the Russian government is pushing to maintain and improve the output form these waters.”