Surging Tanker Costs Amid US Sanctions on Russia
The imposition of US sanctions on Russia has significantly impacted the global shipping market, driving up the cost of hiring oil supertankers on key routes to China.
Increased Competition
The sanctions have reduced the availability of tanker vessels, resulting in intense competition for the remaining ships. Daily rates for very-large crude carriers (VLCCs) on the Middle East-to-China route have surged by 112% to $57,589.
Refinery Demand
Major Chinese refiners have been actively sourcing crude from the Middle East, Africa, and the Americas to compensate for the loss of Russian oil. This increased demand has further exacerbated the tanker shortage.
Impact on Smaller Vessels
The rising demand for VLCCs has also affected costs for smaller vessels, such as Suezmaxes, due to their lower cost-effectiveness on longer routes. Rates for Suezmaxes have climbed amid heightened demand and constrained supply.
Potential for Continued Increase
Concerns persist that tanker rates could remain elevated if the incoming Trump administration adopts a stricter stance against Iran. Increased pressure on Iranian oil shipments could further restrict the availability of tanker vessels.