Supertanker Rates Hit $800,000 a Day as Gulf Tensions Escalate
- The Baltic Exchange's Middle East-to-China benchmark has surged to $800,000 a day after US forces destroyed five Iranian-linked tankers.
- Kpler expects VLCC earnings to stay above $100,000 a day into early next year, more than double the historical norm near $45,000.
- Ship-to-ship transfers in the Gulf of Oman are keeping an estimated 10 million to 15 million barrels a day moving through Hormuz despite the risk.
Supertanker rates on the Baltic Exchange's benchmark Middle East-to-China shipping route have surged to a staggering $800,000 a day. With US forces having destroyed five Iranian-linked tankers and Tehran threatening further escalation in recent days, prospects for near-term stabilization remain limited.
The freight surge signals that crude oil and refined products continue to flow but are becoming increasingly costly to transport out of the Gulf region to global markets.
According to Bloomberg, US Gulf-to-Asia shipments on very large crude carriers average about $29.5 million per voyage, equivalent to $15 a barrel before any additional war-risk charges or unexpected delays.
Kpler expects VLCC earnings to remain above $100,000 a day into early next year, compared with historical levels that exceeded $45,000. Morgan Stanley analysts point out that two-year leasing rates could surge another 20% to 30%.
Manu Sehgal, vice president of strategy and feedstock supply at Indian refiner HPCL-Mittal Energy, told Bloomberg that "crude volume is there. What's hampering it is the transit; what's hampering it is the shipping."
A fleet of tankers conducting ship-to-ship transfers in the Gulf of Oman is helping keep barrels flowing through the Hormuz chokepoint. Vitol's CEO estimated earlier this week that roughly 10 million barrels a day were crossing the waterway, while Goldman analysts put that figure at around 15 million.
The Baltic Exchange's new Gulf of Oman-to-East Asia benchmark has surged 85% since inception, reaching almost $386,000 a day this week.
This means surging tanker rates add another layer of inflation pressure for global central banks. Those costs can filter through to gasoline, diesel, freight, and ultimately consumer goods on store shelves.
By Zerohedge.com
Oil Tanker Rates Hit Record Highs as Middle East Shipping Risks Soar
Oil tanker rates have jumped to record highs as escalating risks to shipping in and out of the Middle East are prompting traders and tanker operators to undertake inefficient and more expensive trade routes.
While the crude oil supply is actually there, shipping it through the Strait of Hormuz remains a very risky endeavor, especially in light of the escalating U.S.-Iran tanker war in the Persian Gulf and the Gulf of Oman, while Saudi Arabia has started to move crude cargoes out of the region through the north of the Red Sea and from Egypt’s Mediterranean ports.
The much longer workarounds are tying tankers and supertankers for longer with the shippers, tightening the market of available vessels so much that rates are skyrocketing to all-time highs.
For example, the benchmark daily rate for a very large crude carrier (VLCC) to ship oil from the Middle East to China has hit a record high of almost $800,000, per data compiled by Bloomberg.
The price of chartering a supertanker to ship crude from the U.S. Gulf Coast to Asia has now hit a lump-sum fee of $29.5 million per run, and that’s not even factoring in fees for additional war risks or unexpected delays.
“The VLCC positions list is now so tight that no one would be too surprised if we see the WS 400 mark breached for a Fujairah/East run off a prompt-ish position before long, crazy as it may sound,” shipbroker Fearnleys said in its latest weekly report for the week ended September 9.
“The oil still needs to get out through the Strait of Hormuz, and Iranians have increased efforts to stop that from happening. It’s a fragile state of affairs,” the shipbroker added.
“There’s quite a few bottlenecks all at the same time,” Alex Grant, Equinor’s global head of crude, products and liquids trading, told Bloomberg on the sidelines of the APPEC petroleum conference in Singapore.
“The market is quite stressed with all of that, and that’s showing up in the shipping rates.”
By Tsvetana Paraskova for Oilprice.com
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