Middle East shipping risk soars, oil tanker freight rates hit historic highs
Bloomberg reports that this week the cost of transporting oil by supertankers has surged to new record highs, following the largest wave of attacks on Middle East shipping since the outbreak of the US-Iran war.
Reports indicate that the daily earnings of ultra-large crude carriers (ULCCs) sailing on the benchmark route from the Middle East to China have reached nearly $800,000; while the rate for the US Gulf of Mexico to Asia route hit a record one-time freight fee of $29.5 million, approaching $15 per barrel without accounting for additional war risks or unforeseen delay costs.
The Baltic Exchange has begun publishing an index covering the Oman Gulf to East Asia route, estimating that the daily earnings for this route surged 85% this week, reaching nearly $386,000.
Reuters, citing data from the Baltic Exchange, reported that VLCC rates on the Middle East to Amsterdam-Rotterdam-Antwerp route also soared to new highs. The escalation in Middle Eastern military tensions has also caused wider ripple effects, with freight rates on the West Africa to Asia route hitting historic highs as well.
Freight analysis by data intelligence company Kpler indicates that VLCC daily charter rates will remain above $100,000 into next year, more than double historical levels; with historical rates rarely exceeding $45,000.
Alex Grant, Equinor's (EQNR) global head of crude oil, refined products, and liquids trading, told Bloomberg at the S&P Global Energy Asia-Pacific Oil Conference in Singapore: "Multiple bottlenecks are occurring simultaneously. The market is under considerable strain because of all this, which is reflected in shipping freight rates."
Global disruptions are impacting freight rates far more severely than oil prices: The US and Iran have attacked tankers in the Persian Gulf, Yemen's Houthi forces are intensifying strikes in the Red Sea, and Ukraine is targeting Russian oil infrastructure and refined product exports.
If elevated shipping costs persist, they could exacerbate inflationary pressures and further increase costs for businesses and consumers.
Potential related stocks include Frontline (FRO), Scorpio Tankers (STNG), International Seaways (INSW), DHT Holdings (DHT), Teekay Tankers (TNK), Teekay Corp. (TK), Nordic American Tankers (NAT), SFL Corp. (SFL), Tsakos Energy Navigation (TEN), Okeanis Eco Tankers (ECO), Torm (TRMD), Kirby (KEX), Capital Clean Energy Carriers (CCEC), Dorian LPG (LPG), KNOT Offshore Partners (KNOP), Ardmore Shipping (ASC), Navios Maritime Partners (NMM).
ETFs: (BWET), (BOAT)
Reports indicate that the daily earnings of ultra-large crude carriers (ULCCs) sailing on the benchmark route from the Middle East to China have reached nearly $800,000; while the rate for the US Gulf of Mexico to Asia route hit a record one-time freight fee of $29.5 million, approaching $15 per barrel without accounting for additional war risks or unforeseen delay costs.
The Baltic Exchange has begun publishing an index covering the Oman Gulf to East Asia route, estimating that the daily earnings for this route surged 85% this week, reaching nearly $386,000.
Reuters, citing data from the Baltic Exchange, reported that VLCC rates on the Middle East to Amsterdam-Rotterdam-Antwerp route also soared to new highs. The escalation in Middle Eastern military tensions has also caused wider ripple effects, with freight rates on the West Africa to Asia route hitting historic highs as well.
Freight analysis by data intelligence company Kpler indicates that VLCC daily charter rates will remain above $100,000 into next year, more than double historical levels; with historical rates rarely exceeding $45,000.
Alex Grant, Equinor's (EQNR) global head of crude oil, refined products, and liquids trading, told Bloomberg at the S&P Global Energy Asia-Pacific Oil Conference in Singapore: "Multiple bottlenecks are occurring simultaneously. The market is under considerable strain because of all this, which is reflected in shipping freight rates."
Global disruptions are impacting freight rates far more severely than oil prices: The US and Iran have attacked tankers in the Persian Gulf, Yemen's Houthi forces are intensifying strikes in the Red Sea, and Ukraine is targeting Russian oil infrastructure and refined product exports.
If elevated shipping costs persist, they could exacerbate inflationary pressures and further increase costs for businesses and consumers.
Potential related stocks include Frontline (FRO), Scorpio Tankers (STNG), International Seaways (INSW), DHT Holdings (DHT), Teekay Tankers (TNK), Teekay Corp. (TK), Nordic American Tankers (NAT), SFL Corp. (SFL), Tsakos Energy Navigation (TEN), Okeanis Eco Tankers (ECO), Torm (TRMD), Kirby (KEX), Capital Clean Energy Carriers (CCEC), Dorian LPG (LPG), KNOT Offshore Partners (KNOP), Ardmore Shipping (ASC), Navios Maritime Partners (NMM).
ETFs: (BWET), (BOAT)