Key facts
- Supertanker rates on the Middle East-to-China route have surged to $800,000 a day.
- US forces destroyed five Iranian-linked tankers.
- Kpler expects VLCC earnings to remain above $100,000 a day into early next year.
- Ship-to-ship transfers in the Gulf of Oman are keeping an estimated 10 million to 15 million barrels a day moving through Hormuz.
- US Gulf-to-Asia shipments on very large crude carriers average about $29.5 million per voyage.
- Morgan Stanley analysts point to a potential 20% to 30% surge in two-year leasing rates.
Supertanker rates on the Baltic Exchange's benchmark Middle East-to-China shipping route have surged to a staggering $800,000 a day following US forces destroying five Iranian-linked tankers and Tehran threatening further escalation. The freight surge signals that crude oil and refined products continue to flow but are becoming increasingly costly to transport out of the Gulf region to global markets.
According to Bloomberg, US Gulf-to-Asia shipments on very large crude carriers (VLCCs) average about $29.5 million per voyage, equivalent to $15 a barrel before any additional war-risk charges or unexpected delays. Kpler expects VLCC earnings to remain above $100,000 a day into early next year, compared with historical levels that exceeded $45,000. Morgan Stanley analysts point out that two-year leasing rates could surge another 20% to 30%.
Manu Sehgal, vice president of strategy and feedstock supply at Indian refiner HPCL-Mittal Energy, told Bloomberg that "crude volume is there. What's hampering it is the transit; what's hampering it is the shipping." A fleet of tankers conducting ship-to-ship transfers in the Gulf of Oman is helping keep barrels flowing through the Hormuz chokepoint. Vitol's CEO estimated earlier this week that roughly 10 million barrels a day were crossing the waterway, while Goldman analysts put that figure at around 15 million.
The Baltic Exchange's new Gulf of Oman-to-East Asia benchmark has surged 85% since inception, reaching almost $386,000 a day. Meanwhile, jet financiers are now more concerned about soaring fuel and borrowing costs than aircraft shortages, according to delegates at a major industry meeting. This shift in sentiment follows recent market turmoil including airBaltic's bankruptcy filing, a surge in oil prices linked to advances by Yemen's Houthis, and a jump in U.S. Treasury yields. Executives noted that while manufacturing bottlenecks remain, they are viewed as a buffer against potential demand slowdown rather than the industry's main challenge. Rising fuel costs have begun to cool activity in the second-hand aircraft market, with some lease rates falling 5% to 10%.