Athens, Greece – Western sanctions punishing Russia for its invasion of Ukraine are reorganising global trade along political lines, defying geography and efficiency.

This new reality is creating a windfall for merchant shipping, but risks creating higher prices for European consumers and hunger for Africa.

The disruption stems from the curbing of Black Sea trade. Ukraine’s ports have been blockaded by Russian sieges from land and sea, impeding shipping. Ukrainian officials told the Reuters news agency that about 100 foreign-flagged ships were trapped in ports on March 11.

“They were in the process of loading or unloading when the war began,” shipowner Yiorgos Gourdomichalis told Al Jazeera. “The system simply shut down. There were no customs officers and harbour masters to process the boats out.”

Just as war risk is affecting trade with Ukraine, sanctions risks are affecting trade with Russia.

The US embargoed Russian oil on March 10, and Europe is under pressure to follow suit. That is creating both a drop in real demand for Russian oil, and a psychological aversion to it.

“There is a potential stigma associated with Russian trades,” said a financial officer at a Piraeus-based tanker operator on condition of anonymity.

“Despite some of these trades still being legal, owners might not want to associate themselves. They might be asked by American oil companies if their vessels have performed recent Russian trades, and this could create a headache. Owners would rather avoid it.”

Windfall rates show how desperate Russia is to export its oil, according to Eva Tzima, head of Research & Valuations at Seaborne Shipbrokers, who said: “The rate for the Black Sea-Mediterranean Suezmax route was quoted at about $16,000/day on February 24 [when war broke out], and managed to break above $157,000/day by March 1.”

The same adverse psychology and political risk associated with Russian oil is lowering demand for its coal and agricultural exports.

“Several importers steer clear of Russian grains and fertilisers despite the fact that these are not sanctioned trades,” said Tzima. “Replacement cargoes in this case would come from France, East Coast South America, and the US, and … importers will have to turn to the longer-haul supplies.”

Shifting trade routes

Those longer hauls cross the Pacific and Atlantic – known as the backhaul route.

“What’s playing favourably for us is that Australia is making up the shortfall to Europe, and that’s fantastic for us, because Australia to Europe is a big journey,” said Ziad Nahkleh, CEO at TEO Shipping, which operates dry bulkers.

Backhaul shipping rates rose by as much as 26 percent between February 24 and March 23 across a range of bulk carrier types.

“The backhaul never used to be $25,000,” said Nahkleh. “It used to be $5,000 to $6,000 a day. Who in his right mind would buy coal from Australia for Europe?”

Committing ships to this 30 to 40 day journey takes them off the market for long periods, reducing available capacity on other routes and raising hauling prices across the board.

This realignment of trade is advancing by the day. Europe imported about a third of its natural gas from Russia last year, and is keen to find alternative sources.

Germany clinched a political agreement with Qatar on March 20 to buy “long-term LNG supplies”. Separately, European Union leaders reached an agreement with United States President Joe Biden on March 25 to increase deliveries of US Liquefied Natural Gas (LNG) by 15 billion cubic metres this year, and an additional 50bcm within the decade.