Oil tanker rates hit record highs amid Middle East shipping risks

Oil tanker rates have skyrocketed to record highs as escalating geopolitical risks in the Middle East force shipping companies to use longer and more expensive trade routes. The ongoing U.S.-Iran tanker war in the Persian Gulf and Gulf of Oman, coupled with Saudi Arabia rerouting crude cargoes through the Red Sea and Egyptian ports, has tightened the availability of vessels.

Data compiled by Bloomberg shows the benchmark daily rate for a very large crude carrier (VLCC) to ship oil from the Middle East to China has hit a record of almost $800,000. Similarly, the cost to charter a supertanker for a run from the U.S. Gulf Coast to Asia has reached $29.5 million, not including additional war risk premiums or potential delays.

Shipbroker Fearnleys highlighted the extreme tightness in VLCC positions, suggesting that rates could breach the WS 400 mark for prompt Fujairah-to-East runs. The broker also noted the continued reliance on the Strait of Hormuz and increased Iranian efforts to disrupt passage, describing the situation as fragile.

Alex Grant, Equinor's global head of crude, products and liquids trading, told Bloomberg that the market is experiencing significant stress due to multiple simultaneous bottlenecks, which is directly reflected in the elevated shipping rates.