Tanker rates hit $1.3 million as Hormuz tensions reshape oil trade

Crude oil shipping costs have reached record levels as rates for Very Large Crude Carriers (VLCCs) surged to $1.3 million per day, according to data from Poten & Partners released on Monday, 5 October. The figure represents a 43-fold increase from early January, when rates for the Middle East Gulf-to-Far East route averaged $30,000 per day. The spike in freight costs now adds approximately $33 to the price of every barrel of crude oil. Based on Brent crude trading near $120 per barrel, transport costs now account for 27% of the total delivered price, up from just 3% at the start of the year. Data from Clarksons Research corroborated the trend, reporting average global VLCC spot earnings at $642,000 per day, with specific Middle East-to-Asia routes frequently exceeding the $1 million threshold. Impact of Strait of Hormuz disruption Security risks and operational restrictions surrounding the Strait of Hormuz are the primary drivers of the price surge. The disruption has forced operators to adopt longer shipping routes, increase ship-to-ship transfers, and pay significantly higher war-risk premiums. These factors have effectively tied up a substantial portion of the global VLCC fleet in the Gulf of Oman, reducing the number of available vessels for standard charters. Saudi Arabian export flows and shuttle operations through the strait have further tightened supply. Each VLCC is capable of transporting approximately 2 million barrels of crude, making these vessels the…