Supertanker rates on the Baltic Exchange's Middle East-to-China route have surged to $800,000 a day after the US destroyed five Iranian-linked tankers and Iran struck 10 ships near the Strait of Hormuz. Kpler expects the elevated freight costs to persist into next year, adding fresh pressure on shipping and fuel costs worldwide.
Supertanker rates on the Baltic Exchange's benchmark Middle East-to-China route have surged to $800,000 a day, with US forces having destroyed five Iranian-linked tankers and Tehran threatening further escalation.
Attacks intensify in the Strait of Hormuz
On September 9 and 10, Iran struck 10 ships operating near the Strait of Hormuz, the narrow waterway through which a large share of the world's seaborne oil passes daily. The US then sank five Iranian tankers after what it described as missile attempts on a Navy warship, and the chokepoint went from tense to nearly impassable within 48 hours.
Yemen's Houthi rebels, aligned with Tehran, also advanced to the island of Perim in the Bab el-Mandeb Strait around September 11. That gives them a vantage point over vessels moving between the Indian Ocean and the Mediterranean via the Suez Canal.
Freight costs climb toward record territory
VLCCs are the supertankers that haul most of the Gulf's crude oil to Asian refiners. On the Gulf of Oman-to-China route, they are now commanding roughly 450 Worldscale points, equivalent to about $11.50 a barrel — a figure that would have seemed absurd six months ago. At that rate, a VLCC hauling two million barrels generates roughly $23 million in shipping revenue per voyage.
Separately, US Gulf-to-Asia VLCC shipments now average about $29.5 million per voyage, or $15 a barrel before war-risk surcharges, according to Bloomberg. Kpler expects VLCC earnings to stay above $100,000 a day into early next year, more than double the historical norm near $45,000. Morgan Stanley analysts, separately, see two-year leasing rates climbing another 20% to 30%.
Barrels still flow, at a cost
Ship-to-ship transfers in the Gulf of Oman are keeping crude moving. Vitol's CEO estimated roughly 10 million barrels a day were crossing Hormuz this week. Goldman, separately, put the figure at around 15 million. According to Bloomberg, Manu Sehgal of HPCL-Mittal Energy said: "What's hampering it is the transit; what's hampering it is the shipping."
The Baltic Exchange's Gulf of Oman-to-East Asia benchmark has surged 85% since inception, reaching almost $386,000 a day. Rising freight adds another layer of inflation pressure for central banks, with costs filtering through to gasoline, diesel, freight, and consumer goods.
Sources: Oilprice.com, Crypto Briefing
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