A shortage of available supertankers is raising global oil shipping costs and making some long-distance crude trades uneconomical, according to shipbrokers, traders and industry data cited in a Sept. 19 report. The squeeze arrives as fuel markets remain tight and the geopolitical conflict around the Strait of Hormuz continues to disrupt seaborne energy flows.
Moving a cargo from Houston to Asia now adds about $26 a barrel, or $52 million a cargo, the report stated, equal to roughly a quarter of the price of West Texas Intermediate futures. That figure represents a cost that traders say can erase the profit margin on a long-haul voyage.
Oil tanker rates have jumped to record highs as escalating risks to shipping in and out of the Middle East prompt traders and tanker operators to undertake inefficient and more expensive trade routes, according to Tsvetana Paraskova of OilPrice.com [1]. The report stated that the cost increase threatens long-haul flows as fuel markets remain tight.
Freight Rates Reach Record Levels on Key Routes
Very large crude carriers hauling 2 million barrels from the Persian Gulf to China are earning upward of $1.2 million a day, according to industry benchmarks. Earnings on the benchmark Saudi Arabia-to-China supertanker route surged to a record $647,000 per day on Thursday, according to Baltic Exchange data cited by Bloomberg, more than ten times the rate a year ago [2].
Supertanker owners were getting paid $510,000 per day on some Gulf routes in August, according to Middle East Eye [3].
Suezmax earnings average more than $300,000 a day, rates typically associated with war-zone voyages, traders and shipbrokers said [10]. Ship-tracking data from Vortexa show U.S.-Asia flows have fallen in recent weeks as freight costs roughly tripled, the report stated.
Conflict and Fleet Stretching Drive Supertanker Squeeze
Industry executives and shipbrokers said they have never seen supertanker availability so tight, with few vessels available for hire in some locations. The main drivers are the knock-on effects of the U.S.-Iran conflict and a large wager by a South Korean tycoon that had already lifted shipping rates before the war, according to the report [10].
Vessels shuttling through the strait are switching cargoes near Oman, while other tankers sail around Africa to pick up Mediterranean cargoes, stretching the fleet, the report stated. Offshore Oman, 16 tankers clustered together to transfer millions of barrels of oil that had been stranded in the Persian Gulf [5].
Saad Rahim, chief economist at Trafigura Group, said at the Bloomberg Commodity Investor Forum: “It has never been this expensive to move oil around.” The Iran war has turned very large crude carriers into assets earning more than $650,000 a day, with earnings on the benchmark route surging to a record [2].
