Supertanker rates on the Persian Gulf to East Asia route topped $1.4 million per day this week, a record. Ship-to-ship transfers near the Strait of Hormuz tie up vessels, and the resulting shortage is pushing freight costs for U.S. crude cargoes sharply higher.
Supertanker rates topped $1.4 million per day on the Gulf to East Asia trip this week, according to data compiled by Bloomberg. Rates had already risen above $1 million per day on the Persian Gulf to China route in September, a record at the time. Then they climbed another 40% in the first week of October alone.
Hormuz transfers tie up the fleet
The cause is a bottleneck outside the Strait of Hormuz. Increased flows of crude oil from the Strait, mostly through ship-to-ship transfers in the Gulf of Oman, tie up supertankers for weeks and limit the availability of very large crude carriers on other key routes, such as the U.S. Gulf Coast to Asia.
The squeeze has spread to smaller ships. Demand and daily rates for Aframax and Suezmax vessels have also surged amid the shortage of supertankers.
Vitol chief executive Russell Hardy said the shuttle-shipping through Hormuz is inefficient at the Energy Intelligence Forum in London. He also gave a blunt summary of the shift, saying "We started this conflict with a crude crisis." In his account, it then became a product crisis and is now a shipping crisis.
U.S.-to-Asia cargoes cost millions more
Freight on U.S. routes is climbing as well. Trafigura reportedly chartered a supertanker to carry crude from the U.S. Gulf Coast to China at a total fee of $76 million, according to a source cited by CNBC. Pre-war fees ran $7 million to $10 million, so the new fee is ten times higher.
That fee suggests a freight cost of about $38 per barrel. On the U.S. Gulf-to-Japan route, one supertanker has reportedly been offered at $82 million for the journey, up 50% from three weeks ago, Bloomberg reports.
Argus experts said freight premiums are adding tens of dollars per barrel to delivered crude costs, raising questions about demand destruction and the sustainability of current market pricing.
Source: Oilprice.com
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