US Crude Shipping Costs Soar to Record High Amid Middle East Conflict
The cost of shipping US crude oil to China has reached an all-time high due to disruptions in Middle East energy flows. According to Baltic Exchange data, hiring a very large crude carrier (VLCC) to move 2 million barrels of crude from the US Gulf Coast to China costs around $44.8 million.
This is more than double the cost before the outbreak of the war in Iran in late February, which was approximately $17.8 million. The surge in freight rates comes as the conflict continues to disrupt established oil-supply routes, making alternative sources such as the US more important for Asian buyers.
Saudi Arabia closed its East-West pipeline this week, adding pressure on global oil flows and making US crude even more crucial for refiners looking to secure alternative supplies. However, despite the soaring shipping bill, the economics of bringing crude from the US Gulf remain favourable for Asian buyers due to the lower cost of West Texas Intermediate (WTI) compared to competing grades such as Murban.
The jump in US Gulf-to-Asia freight rates is part of a broader surge in tanker costs as the conflict reshapes global shipping routes. Strong fuel demand and refiners' continued competition for available crude are adding to the pressure, making transportation costs climb even higher.