Global Tanker Shortage Sends Oil Shipping Rates Skyward

Oil shipping rates are surging due to tightened global tanker supply following US sanctions on Russia. Shell and Shenghong Petrochemical booked VLCCs at significantly higher rates for February loading. Increased demand is pushing freight rates up, impacting Asian refiners' margins as spot premiums rise.

Global oil shipping rates have surged, driven by a combination of new U.S. sanctions on Russia and increased demand for Middle Eastern oil shipments to Asia. These dynamics have contributed to a tightening in the global tanker supply, industry sources revealed on Wednesday.

On Tuesday, Shell secured three Very Large Crude Carriers (VLCCs) at Worldscale 70, reflecting a notable rate increase for February Middle East crude loadings. Similarly, Shenghong Petrochemical booked two VLCCs for the same period, while Unipec's earlier bookings in late January were significantly lower Y at WS51-52.25.

Freight rates for supertankers along the Middle East to China route, known as TD3C, increased by 15%, reaching WS70.45 on Wednesday. Similar rate increases were observed on other routes, raising concerns among Asian refiners as spot premiums for crude escalate, squeezing their profit margins.

(With inputs from agencies.)