Oil tanker freight rates hit record highs amid Middle East risks — OilPrice
Oil tanker freight rates have reached record highs amid growing risks to shipping in the Middle East. Traders and tanker operators are choosing longer and more expensive routes, reducing the number of available vessels, OilPrice reports.
Risks in the Strait of Hormuz
According to the publication, crude oil supplies are available, but transporting it through the Strait of Hormuz has become riskier amid escalating confrontation between the United States and Iran over tankers in the Persian Gulf and the Gulf of Oman. OilPrice also writes that Saudi Arabia has begun moving oil cargoes out of the region via the northern Red Sea and Egyptian Mediterranean ports.
Longer detour routes keep tankers and supertankers occupied for longer, narrowing the market for available vessels. According to OilPrice, this contributes to a sharp increase in maritime shipping rates.
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Transportation costs
According to Bloomberg, the benchmark daily rate for a very large crude carrier, or VLCC, on the route from the Middle East to China reached a record level of nearly $800,000. The one-time charter cost of a supertanker to transport oil from the U.S. Gulf Coast to Asia reached $29.5 million per voyage.
This amount does not include war-risk surcharges and possible unforeseen delays. Shipbroker Fearnleys, in its weekly report for the period ending September 9, reported an extremely limited number of available VLCC positions. The company also said that Iran had intensified efforts to obstruct oil exports through the Strait of Hormuz.
Alex Grant, head of global trading for crude, oil products and liquids at Equinor, told Bloomberg that several bottlenecks had emerged in the market simultaneously. According to him, market tension is reflected in freight rates.
