EIA: Mideast Tanker Rates at 20-Yr High on Hormuz Closure


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Middle East crude tanker rates reached 20-year highs 
in March, hitting $16 bbl, as the closure of the Strait of Hormuz shuttered the 
region's shipping artery for oil, data from the U.S. Energy Information 
Administration showed Thursday (3/26).

   Typically ranging $1-$2 bbl for much of the past two decades, with the 
occasional spike above $6 bbl, tanker rates ballooned after the March 2 closure 
of the Hormuz, a vital chokepoint that handled 20 million bpd of petroleum 
liquids prior to the Iran war.

   The EIA data showed rates for Very Large Crude Carriers (VLCCs) traveling 
from the Middle East to Asia eclipsed all historical marks since at least 2005.

   The unprecedented spike came as physical risks, as well as soaring war 
insurance, essentially halted traffic on the Hormuz, trapping vessels already 
loaded with crude within the Persian Gulf.

   The confinement has severely reduced global tanker availability, pushing 
shipping costs higher for all destinations including the U.S. Gulf Coast. Clean 
tanker and natural gas carrier rates have also seen significant increases as 
the maritime industry avoids the high-risk corridor.

   Crude oil tanker rates from the Americas, especially the U.S. Gulf Coast, 
have also risen to record highs due to demand for crude and fewer vessels 
available for shipment, the EIA observed.

   A 60-day waiver of the Jones Act for U.S. shipping has further shifted 
domestic tanker availability. The move permits the transport of energy and 
agricultural products between U.S. ports by international tankers -- a practice 
previously forbidden since 1920.




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