Middle East Shipping Risks Send Oil Tanker Rates Skyrocketing

Oil tanker rates have reached record highs due to escalating risks in shipping through the Middle East. This has led traders and tanker operators to take longer, more expensive routes around the region.

The Strait of Hormuz remains a high-risk area for shipping crude oil, particularly with tensions between the US and Iran increasing. As a result, some shippers are moving cargo out of the region through the north of the Red Sea or Mediterranean ports in Egypt.

This has caused a shortage of available vessels, leading to skyrocketing rates. For example, the daily rate for a very large crude carrier (VLCC) shipping oil from the Middle East to China has reached nearly $800,000 per day, according to Bloomberg data.

The price of chartering a supertanker to ship crude from the US Gulf Coast to Asia has also hit a record high, with a lump-sum fee of $29.5 million per run. Shipbroker Fearnleys warned that the market is under immense stress due to multiple bottlenecks.