Oil tankers earn $1 million a day as war leaves ship shortage

Oil tanker rates have reached an unprecedented $1 million per day, marking a new industry high, due to the ongoing Iran war and resulting ship shortage. This benchmark rate, set by the Baltic Exchange in London, was exceeded by vessels transporting oil from the Persian Gulf to China, which were hired at $1.035 million daily. The main cause of this surge in tanker earnings is the limited availability of ships willing to navigate the Strait of Hormuz, a critical chokepoint for collecting cargoes.

Instead, tankers are now mostly shipping oil through the Hormuz to collection points outside the strait. The main reason for the shortage is the war in Iran, which has deterred many ships from crossing the Hormuz. Additionally, Korean tycoon’s speculative betting on oil prices has driven up shipping costs. The surge in tanker rates also reflects the soaring oil-refining margins, as global demand for fuel far exceeds the capacity to produce it due to the wars in Iran and Ukraine.

Consequently, refineries are compelled to process whatever oil they can obtain, as refining still proves to be a profitable venture. Furthermore, the time-consuming journey through the Hormuz and disruptions in Saudi oil shipments due to Houthi rebels in Yemen have contributed to the increased tanker rates. The combination of these factors has resulted in a significant increase in the cost of transporting crude oil, even in markets facing difficulties.