Asian Refiners Ditch U.S. Oil as Supertanker Rates Hit $82 Million
The record-high freight costs refiners have to pay to receive a cargo of crude oil from the U.S. Gulf Coast have effectively shut the arbitrage to Asia, with refiners in the top crude oil-importing region turning to more barrels from the Middle East and South America, shipbrokers and traders have told Reuters. U.S. crude, which had come to the rescue of the Asian refiners during most of the Iran…
Record-high freight costs associated with receiving crude oil shipments from the U.S. Gulf Coast have effectively halted Asian refiners' ability to profitably arbitrage oil to Asian markets, according to shipbrokers and traders. Asia, which had previously relied on U.S. crude to support its oil imports during the Iran war, is now turning to Middle Eastern and South American sources as the economics of paying $80 million to have a cargo of crude shipped from the U.S. Gulf Coast have become unfeasible.
Market chatter this week indicated that U.S.-Asia freight rates have surpassed all previous records, with tanker market conditions being strained due to a shortage of vessels navigating the complexities at the Strait of Hormuz. Trafigura, a major commodity trading firm, reportedly chartered a supertanker to transport crude oil from the U.S. Gulf Coast to China for a lump-sum fee of $76 million, which represents a tenfold increase from the previous range of $7 million to $10 million before the war.
The freight cost of this voyage has now surged to approximately $38 per barrel of oil. Similarly, rates for U.S. Gulf-to-Japan routes have skyrocketed, with one supertanker reportedly being offered for $82 million in total, a 50% increase from just three weeks prior. In response to these obstacles, Asian refiners are now considering purchasing more of the United Arab Emirates' Murban grade of crude, with the premium for Murban crude over Dubai quotes having risen to more than $11 per barrel on Thursday.
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