Goldman says soaring freight costs widen oil price gaps

Tanker costs are now pulling apart oil prices that normally move together. Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.48% estimates that the average global crude freight rate has climbed to $30 a barrel, up from $4 a year ago, and rates on Middle Eastern routes have reached $35. Oil from the Middle East is still reaching buyers despite more attacks on tankers. But shipping and insurance costs are so high that what refiners pay for crude now depends heavily on where it was loaded. Heavy crude is piling up unsold in the Americas while buyers in Asia and Europe are short of supply.marketscreener+1

Ship-to-ship transfers tie up the fleet

"We think ship-to-ship transfers are the main driver of the freight rates rally," Goldman analysts wrote. They said diversions around Red Sea attacks and the blockade of Iran's tanker fleet also add to the squeeze. Supertankers can wait for weeks in the Gulf of Oman to take on crude moved out through the Strait of Hormuz. That leaves fewer vessels for other routes. Supertanker rates from the Gulf to East Asia rose about 40% in the first week of October alone, according to Bloomberg data cited by OilPrice.com.oilprice+1

The price gaps are large. Goldman says Murban crude, loaded at Fujairah outside the strait, now sells at a $43-a-barrel premium to Basrah crude loaded inside the Gulf. In February the gap was $2. Dated Brent, a benchmark for physical cargoes, trades $40 above comparable West Texas Intermediate and $24 above Dubai crude.marketscreener

Heavy crude glut in the Americas

Reuters reported on Monday that dense heavy crude is building up in North and South America. High freight costs are blocking exports, and US refiners are already running close to their limits. "It's all freight," said Scott Shelton, an energy specialist at TP ICAP. Signal Maritime analyst Georgios Sakellariou estimated that a supertanker from the US Gulf Coast to Europe cost about $24.50 a barrel last week, compared with about $4 before the Iran war began in late February. Shipping from the Americas to Asia cost about $40 a barrel.marketscreener+1

Supply in the Americas is also rising. Venezuelan exports have surged, Canadian output is at a record, and Washington has released more than 130 million barrels from its emergency reserve. Argus Media said Canadian, Colombian and Ecuadorian heavy grades each fell more than $10 a barrel to six-week lows.marketscreener

Guyanese grades hit record discounts

Guyana's crudes have also weakened. Platts assessed Payara Gold at a $16.05-a-barrel discount to Dated Brent, down $6.55 in one day and the weakest level since its assessments began in December 2023. The drop followed an offer of a November-loading cargo by ExxonMobil Exxon Mobil Corporation ↗ 1.68%. Platts said Suezmax freight from Guyana to Northwest Europe reached w855 on Oct. 9, the highest on record. One trader described the market as disorderly, and another said they wished they had a supertanker available.indexbox