Tanker rates hit records as US-Iran war chokes Hormuz oil routes

Global tanker freight rates have surged to all-time highs as the US-Iran conflict tightens its grip on the Strait of Hormuz, with supertankers on the benchmark Middle East-to-China route now earning nearly $800,000 a day, according to Bloomberg. The disruption is compounding an already strained oil market, pushing Brent crude back above $100 a barrel for the first time since July — up more than 40% since the war began in late February.theedgemalaysia+2

On the US Gulf-to-Asia run, charterers have been offered very large crude carriers at a record lump-sum fee of $29.5 million, equivalent to close to $15 per barrel before war-risk premiums or delay costs. Freight analysis from Kpler projects VLCC daily earnings will remain above $100,000 into next year, more than double historic norms that rarely exceeded $45,000, while Morgan Stanley ↗ 4.17% forecasts two-year leasing rates could climb 20% to 30%.bloomberg+1

Escalation at Hormuz

The latest price spike followed US strikes on five Iranian oil tankers on Tuesday, one of which was sunk, after Iran launched missiles toward a US Navy vessel. Tehran has threatened further retaliation, and at least seven tankers have been struck since Tuesday, spreading alarm through commercial shipping. Maritime transits through the strait have fallen sharply, with preliminary data showing only six commodity vessels passing through on Tuesday, compared with a 10-day average of 12.moneycontrol+1

Some shipowners continue to operate a "shuttling" system through the Gulf of Oman, keeping roughly 10 million barrels a day flowing, according to the chief executive of oil trading giant Vitol Group. But vessel availability is limited and costs are steep. The Baltic Exchange's new Gulf of Oman-to-East Asia index shows daily earnings on that route have spiked 85% since inception to nearly $386,000.news.futunn+1

Ripple Effects Across the Supply Chain

The strain extends well beyond crude. US retail diesel prices have hit a record close to $6 a gallon, while gasoline climbed to $4.22, its highest since early June. Goldman Sachs The Goldman Sachs Group, Inc. ↗ 5.29% has raised its oil-price forecast by $5 a barrel, warning that if attacks intensify, crude could reach $120 by year-end.moneycontrol

Houthi attacks near the Bab el-Mandeb strait are forcing some supertankers to load Saudi crude from a Mediterranean terminal, adding more than three weeks and millions of dollars to the voyage to Asia. Asian buyers are also turning to US crude to balance cost against risk.theedgemalaysia

"We have to accept that relatively higher logistics cost, because so many alternative routes will be necessary instead of the Middle East," said Takeshi Hashimoto, chairman of Mitsui OSK Lines. At the Asia Pacific Petroleum Conference in Singapore this week, Equinor ↘ 3.33% trading head Alex Grant put it plainly: "The market is quite stressed with all of that, and that's showing up in the shipping rates".theedgemalaysia