Gulf Oil Tanker Rates Surge as Middle East Exports Rise

Oil tanker rates in the Gulf region have surged nearly double in a week, driven by rising demand as Middle Eastern producers increase exports. According to shipping data, the cost to hire a tanker outside the Strait of Hormuz has jumped to $190,500 per day from $106,500 just a week ago. For very large crude carriers (VLCCs) navigating through the Strait of Hormuz, average daily earnings have hit a record high of nearly $470,000, up from around $419,000 a week prior.

The increase in rates comes as traffic through the Strait of Hormuz, a vital waterway, remains modest following Iran's lifting of its blockade after a 60-day ceasefire with the U.S. was agreed upon. The number of ships passing through the strait is still far below the pre-conflict daily average of 125. Meanwhile, around 100 tankers with cargoes remain stuck inside the Gulf, exacerbating the shortage of available vessels.

Middle Eastern producers, particularly Abu Dhabi National Oil Company, have ramped up crude tenders this month, urging buyers to load from inside the Gulf. This has further spurred demand for tankers. South Korean shipping group Sinokor, one of the world's largest operators of supertankers, has been active in the region, with its Belgium B supertanker entering the Gulf to load cargo.

Despite the rise in tanker rates, war risk insurance costs have softened to around 3% of a ship's value, down from 5% a week ago. This reduction translates to savings of hundreds of thousands of dollars in insurance costs for ships. Buyers in India, including major refiner Reliance, have been seeking crude from the region following months of supply disruptions.