Oil tanker costs hit record $1.2mn a day as Iran war disrupts shipping

{"text":[[{"start":10.48,"text":"The cost of hiring an oil supertanker has passed $1.2mn a day for the first time on routes between the Middle East and Asia, adding to the spiralling pressure on global energy markets triggered by the war in Iran."}],[{"start":24.2,"text":"The conflict has caused a severe shortage of some of the world’s largest tankers, known as Very Large Crude Carriers (VLCCs), because ships are having to redraw their routes and travel much longer distances."}],[{"start":37.72,"text":"Rates between the Middle East and China have more than doubled since late August for the class of carrier, which holds about 2mn barrels, according to shipbroker Braemar. Other routes have seen similar jumps, with the cost of transporting oil from Brazil to China surging by a third over the past week, Braemar added."}],[{"start":56.68,"text":"“Freight rates have gone parabolic,” said Amrita Sen, founder of consultancy Energy Aspects. “Freight may well be the thing that breaks this market in the near term as landed crude costs in Asia have soared towards $150 a barrel.”"}],[{"start":72.38,"text":"For most of last year, rates for VLCCs hovered between $20,000 and $50,000 a day. Before the conflict began, a structural shortage of ships had already propelled the cost for Gulf cargoes to a historic high of $120,000 a day in February, according to the Baltic Exchange, which assesses shipping rates."}],[{"start":null,"text":"

"}],[{"start":93.36,"text":"The soaring cost of transporting oil has forced some refineries to start cutting production as their profitability falls, even as the price of refined fuels also hits record highs. Diesel prices in Singapore are around $180 a barrel, and well over $200 a barrel in both the US and Europe."}],[{"start":112.48,"text":"Meanwhile, Brent crude prices have fallen back to around $100 a barrel this week, well below their wartime high above $125 in April."}],[{"start":122.12,"text":"Sen predicted that the price of crude would dip further, as refineries scale back their purchases. “As a trader recently put it — everyone wants crude but no one wants to buy it,” she said."}],[{"start":132.56,"text":"Shipping costs have been inflated because the war in the Gulf has forced refineries to start looking further afield for their crude, tying up ships for longer periods of time. “Indian refineries are buying crude from Brazil and Guyana and west Africa, or the North Sea,” said Martijn Rats, an analyst at Morgan Stanley. “You are talking 30 to 40 days of sailing.”"}],[{"start":153.84,"text":"Meanwhile, oil is moving through the Strait of Hormuz on 60 vessels that are shuttling back and forth before transferring their cargoes in the Gulf of Oman to other ships to continue the onward journey."}],[{"start":165.4,"text":"Around 15 per cent of the world’s tanker fleet is waiting off the Omani coast, shipbroker Clarksons estimated."}],[{"start":171.94,"text":"This process has also caused lengthy delays, as supertankers wait outside the Gulf to receive oil. “The ship-to-ship transfers are taking an enormous amount of time,” said Rats. “You are just having a [supertanker] do nothing for 10 days” while it waits for a cargo, he added."}],[{"start":188.8,"text":"Tankers travelling in the Middle East also face enormous insurance costs that in some cases amount to around 10 per cent of the value of the hull of the ship — a typical measure of shipping cover. In less active conflict zones, war-risk cover normally hovers around 3 per cent or less."}],[{"start":204.78,"text":"“Shipping is no longer a marginal cost in oil markets — it is becoming a defining price driver. Freight charges now account for around a fifth of the cost of delivering crude to refineries, highlighting how disruption at sea is increasingly feeding directly into the delivered price of oil,” said Tom Reed, head of oil market analysis at the pricing agency Argus."}],[{"start":224.92,"text":"Some of China’s largest independent refineries have started to reduce their production, reported Argus Media last week."}],[{"start":231.36,"text":"Hengli Petrochemical has cut production at its vast 400,000-barrel-a-day Dalian refinery to 80 per cent from almost full capacity previously, and may cut rates further. Rongsheng and Shenghong were both also expected to reduce production from late September, Argus said."}],[{"start":247.2,"text":"“The cost to ship crude oil is reaching record highs, so it’s no surprise it’s starting to impact refining margins,” said Mary Melton, senior tanker analyst at Braemar, who added that shipping accounts for 20 per cent to 40 per cent of the delivered cost of crude."}],[{"start":271.12,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1790147845_5977.mp3"}