Tanker Rates Smash $1 Million a Day as Oil Shipping Crisis Deepens
The daily rate for commissioning a tanker topped $1 million for the first time in history amid a tightening supply of vessels to carry crude oil and fuels whose owners are willing to dare the Strait of Hormuz. The squeeze is adding extra costs to the price of oil for physical delivery, just as tankers become a cybersecurity target. Bloomberg reported record-high tanker rates earlier this week,…
For the first time ever, the daily cost to charter a tanker has exceeded $1 million, a consequence of dwindling vessel availability and owners' willingness to traverse the perilous Strait of Hormuz, according to Bloomberg. Tanker rates, highlighted by the Baltic Exchange, soared to a record $1.035 per day for vessels bringing crude from within the Persian Gulf, and a more substantial $644,000 for ships transporting crude from the Gulf of Oman to China.
The Middle East is not the sole region witnessing astronomical tanker rates, as Russia's Black Sea port of Novorossiysk also experiences heightened costs due to the threat of Ukrainian drone attacks on vessels and infrastructure. Over the past week, the rate for shipping crude oil from Novorossiysk to West India and North China rose by 2.7% and 3.1% respectively, according to local pricing indexes.
Rising freight rates consequently elevate the final prices of crude, exacerbating the predicament of buyers amidst the ongoing conflict between the United States and Iran. Although recent U.S. Energy Information Administration data indicated a 7-million-barrel inventory buildup, this is insufficient to alleviate the global supply crunch.
Tensions escalated when U.S. federal authorities disclosed an investigation into a potential cyberattack on tankers navigating from Europe to the U.S. Gulf Coast, with at least two vessels targeted in August near Gibraltar. The Wall Street Journal reported that the inspections exposed the tankers, carrying crude and liquefied gas, to cyber threats that could lead to collisions, spills, or even explosions.
The head of the U.S. Coast Guard's Cyber Command warned of the volatile nature of crude oil and the risks associated with cyberattacks, while the surge in tanker rates is prompting energy market participants to consider purchasing their own vessels, amid soaring insurance costs. Second-hand tankers are fetching premium prices due to the Strait of Hormuz's closure, with some used vessels now valued higher than their new counterparts.
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