Tanker Rates Soar to Record as Oil Crisis Becomes Shipping Crisis
Russia, Germany Add Diesel Supply as Fuel Market Scrambles for Barrels What I Cover Tsvetana Paraskova is an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities,… The cost of shipping crude oil soared to record highs last month as the Iran war reshuffled trade routes and patterns and tied up more tankers in inefficient and lengthy voyages.
Supertanker ratessoaredin September to above $1 million per day on the Persian Gulf to China route—a record high.
The September record was soon smashed as freight rates soared by another 40% in the first week of October alone, to top $1.4 million per day on the Gulf to East Asia trip this week, according to data compiled byBloomberg.
The increased flows of oil from the Strait of Hormuz, mostly thanks to ship-to-ship (STS) transfers in the Gulf of Oman, are tying up supertankers for weeks waiting for the transfers outside the Strait, limiting the availability of very large crude carriers (VLCCs) for the other global key oil trade routes, such as the U.S.
The inefficient oil loadings in the Middle East and the very tight supertanker market resulting from these have created a ripple effect extending to the market of smaller vessels, Aframax and Suezmax, whose demand and daily rates have also surged amid a shortage of supertankers.
Thus, the Iran war and the oil crisis has also turned into a full-blown shipping crisis, with record rates being smashed nearly every day.
dollars to the cost of a single crude oil cargo, further fueling oil and fuel prices.Related: U.S.
Oil Drilling Continues to Inch Upward The shuttle-shipping through the Strait of Hormuz is “very inefficient,” Russell Hardy, chief executive officer at the world’s biggest independent oil trader, Vitol,saidat the Energy Intelligence Forum in London this week.
“We started this conflict with a crude crisis.
Now we have more crude oil coming out of the Middle East, but it is turning into a shipping crisis,” Hardy added.
“There is really not quite enough shipping to go around,” the executive noted.
Gulf-to-Japan route are skyrocketing and one supertanker has been reportedly offered at a total fee of $82 million for the journey, up by 50% from just three weeks ago, Bloomberg reports.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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