A Shortage of Oil Tankers Is Threatening to Keep Gas Prices High
Record shipping rates through the Strait of Hormuz could offset falling crude prices.
The ongoing war in Iran has triggered a shortage of oil tankers, threatening to keep gas prices elevated. The conflict has caused disruptions in the oil supply chain, with attacks on Saudi Arabia's bypass pipeline leading to more crude being transported through the Strait of Hormuz. This has placed an undue strain on the already limited tanker fleet.
The cost of hiring an oil supertanker to navigate the strait has surged to a record high, with rates now exceeding $1 million per day. The shortage extends beyond the Middle East, with global average daily earnings for a VLCC reaching nearly double the previous week's rate. This squeeze on the tanker market adds to the pressure on refiners, who are already grappling with record shipping costs squeezing their margins.
As a result, fuel prices could remain high even if global crude prices fall, potentially impacting U.S. gasoline prices before the November midterm elections. The shortage of oil tankers has forced Saudi Arabia to rely on workaround strategies, such as ship-to-ship transfers and longer voyages around the Cape of Good Hope. However, the limited capacity for these ship-to-ship transfers may soon prove insufficient to meet the increased demand.
Written by urgent.news from Hindustan Times - World News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
