Mideast Chaos Sends Supertanker Rates Soaring To $800,000 A Day

Supertanker rates on the Baltic Exchange's benchmark Middle East-to-China shipping route have surged to a staggering $800,000 a day. With US forces having destroyed five Iranian-linked tankers and Tehran threatening further escalation in recent days, prospects for near-term stabilization remain limited.

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 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 this week.

This means surging tanker rates add another layer of inflation pressure for global central banks. Those costs can filter through to gasoline, diesel, freight, and ultimately consumer goods on store shelves.