Oil Shipping Market Prices Soar Tenfold in Half a Year Amid Transport Capacity Shortage

The oil shipping market has seen unprecedented growth in recent months, with prices surging tenfold in just half a year. According to data from the Baltic Exchange, the TCE of the TD3C route (Middle East Gulf to China) was reported at $1.2125 million per day on September 17, up 40.64% week on week.

This is a significant increase from just a month ago, when this figure was around $700,000. Looking further back, before the official outbreak of the US-Iran conflict on February 13, the corresponding TCE of TD3C was about $117,400 per day.

The surge in prices is attributed to changes in the Middle East crude oil export mode after the Strait of Hormuz was blocked. This has led to a systematic and sharp consumption of the effective transport capacity of Very Large Crude Carriers (VLCC), with part of the crude oil no longer following traditional direct sailing paths.

According to analysis, nearly 10% of the VLCC fleet is trapped in the Middle East, and another 10% is on standby and stranded. Meanwhile, global shipyards are building new ships, but current production capacity can only mainly replace old ships that are about to exit, with not many new increments that can be delivered immediately.

The root cause of the shortage lies in the fact that vessels over 15 years old account for as high as 41% of the global VLCC fleet. The IMO's CII carbon emission rating and the EU ETS carbon charge constitute hard compliance constraints, making it difficult for these old vessels to meet standards.