Record Shipping Costs to Asia as Iran War Disrupts Crude Supplies
The cost of shipping US crude oil to Asia has reached a record high of $44.8 million for a very large crude carrier (VLCC) carrying 2 million barrels from the US Gulf Coast to China, according to Baltic Exchange data.
This is an all-time high and up sharply from $39 million just a day prior, before the break out of the war in Iran in late February, when the cost was about $17.8 million.
The surge in shipping costs comes as global tanker freight rates are also rising, with fewer ships willing to transit routes that carry the risk of attack, including through the critical Strait of Hormuz.
US oil continues to backstop the supply gaps left by the war, making American supplies even more critical. The trade remains viable because West Texas Intermediate, the benchmark US crude grade, delivered into Asia is still cheaper than competing cargoes.