Supertanker rates on the Gulf-to-China route have shot past $500,000 a day as shippers find workarounds to avoid the Strait of Hormuz. Saudi Aramco and Chinese state carriers are now moving crude through ship-to-ship transfers off Fujairah instead of sending tankers into the strait, while daily crossings have collapsed to single digits.
VLCC rates blow past $500,000 a day
Supertanker earnings on the Middle East-to-China route have ballooned past $500,000 a day. Fixing costs for cargoes loaded inside the Strait of Hormuz jumped to $31 million a voyage for the tanker Mongolia Prosperity. The surge comes as the number of vessels leaving the Gulf has slowed to a mere couple per day.
Saudi Aramco resumed crude loadings at its Ras Tanura export terminal and loaded at least three VLCCs — the Malaysia Prosperity, Algeria Prosperity and Singapore Prosperity, all owned by Sinokor — offering them to Asian buyers through ship-to-ship transfers off Fujairah in the UAE instead of sending them through the strait.
Hormuz crossings slow to a trickle
Just six commodity vessels crossed the strait on Monday, up from three on Saturday and two on Sunday, with no VLCCs or LNG tankers among them. As a result, China's state shipping giants COSCO and CMES have stopped entering Hormuz and Bab el-Mandeb altogether, redeploying a fleet of more than 100 VLCCs to collect Gulf barrels from Fujairah and Oman instead.
According to Oilprice.com, Iran threatened a "fully offensive" posture as Washington ruled out extending the Memorandum of Understanding signed June 17, which has now lapsed. ICE Brent was trading at $91 a barrel on Tuesday.
Saudi crude finds a workaround
Saudi Arabia is privately offering Arab Medium and Heavy cargoes through ship-to-ship transfers off Fujairah, letting Asian refiners collect September cargoes without sending tankers into the strait at all.
Available tonnage is tightening too. Only 372 supertankers are currently loaded against 592 tankers ballasting, with the pool of empty VLCCs at its highest in 5 years. For shipping companies, surreptitious transits through the strait have become the most lucrative freight trade of the day, with several more Saudi-origin VLCCs booked privately, without brokers.
Source: Oilprice.com
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