Supertanker shortage makes long-haul oil trades uneconomical

A severe shortage of the world's largest oil tankers is driving freight costs to levels that shipbrokers say they have never seen, making some long-distance crude trades uneconomical and threatening to reshape global oil flows at a time when fuel markets are historically tight.

Bloomberg reported on September 19 that in some parts of the world there are barely any Very Large Crude Carriers left for hire. Moving a cargo from Houston to Asia now adds roughly $26 a barrel — about $52 million per cargo — to the cost of supplying the world's largest crude-importing region, an amount equal to roughly a quarter of the price of West Texas Intermediate futures. Before the US-Iran war, shipping typically accounted for only a tiny fraction of delivered crude costs.businesstimes+3

A Fleet Stretched to Breaking Point

The squeeze stems from two forces. Vessels shuttling barrels through the Strait of Hormuz are tying up ships for longer as they conduct ship-to-ship transfers near Oman, a workaround that arose after drone strikes knocked Saudi Arabia's East-West pipeline offline. Brokers estimate around 15 percent of the global VLCC fleet is now absorbed in Hormuz shuttle work alone. Simultaneously, Asian refiners replacing lost Middle Eastern supply with Atlantic Basin cargoes from the United States, Brazil, and West Africa have stretched remaining tonnage across far longer routes.energynewsbeat+1

VLCCs hauling two million barrels from the Persian Gulf to China are earning upward of $1.2 million a day, according to the Business Times. Lloyd's List reported Gulf of Oman VLCC earnings up about 250 percent month-to-date. "It has never been this expensive to move oil around," Saad Rahim, chief economist at trading giant Trafigura, said at the Bloomberg Commodity Investor Forum on September 17.businesstimes+1

The rally has pushed the combined value of the world's largest tanker equities to a record of nearly $70 billion. But for refiners, the cost is becoming prohibitive. US-to-Asia flows have fallen in recent weeks as freight roughly tripled, and a Japanese refiner recently purchased Alaskan crude — a grade not typically suited for its plants — simply because of the shorter sailing distance.businesstimes

Record Orders Cannot Fix This Year's Shortage

Shipowners have responded with the largest VLCC ordering wave in at least 25 years. Reuters Thomson Reuters Corporation ↘ 5.12% reported on September 17 that more than $20 billion in supertanker orders have been placed in 2026, with Signal Group data showing 217 VLCCs ordered versus 93 in all of 2025. But the new tonnage will not arrive in time. Most deliveries are clustered in 2028 and 2029, while only about 28 ships are expected this year. Just one VLCC was delivered in 2024 — a 36-year low — after a decade of under-ordering left the fleet aging, with roughly one in five ships now more than 20 years old.reuters+2

JPMorgan ↗ 0.10% this week conceded it no longer has a baseline oil-market outlook, with commodities strategist Natasha Kaneva writing that the "economic red lines" expected to force a Hormuz reopening have been crossed without resolution. That uncertainty hangs over a market where the IEA's September report showed global refinery throughputs still running 4.2 million barrels a day below year-earlier levels, and European diesel futures near $200 a barrel signal processors are desperate for every cargo they can secure.energynewsbeat+1