Surging Oil Shipping Rates Spark Supply Concerns

Oil shipping rates are escalating due to anticipated U.S. sanctions on Russia's tanker fleet and the increasing demand for tankers to transport Middle East crude to Asia. Recent bookings at higher rates indicate a growing trend, affecting freight charges for routes including TD3C, Middle East to Singapore, and U.S. Gulf to China.

Oil shipping rates are surging as global tanker supply tightens amid expectations of wider U.S. sanctions targeting Russia's fleet. Industry sources report that the demand for tankers to transport crude oil from the Middle East to Asia is significantly boosting freight costs.

On Tuesday, Shell and China's Shenghong Petrochemical reserved several Very Large Crude Carriers (VLCCs) at Worldscale 70 rates to load Middle East crude. This represents a notable increase from previous bookings, such as China's Unipec's WS51-52.25 for January loading.

Freight charges for VLCCs on the Middle East to China route climbed by 15% to WS70.45, equivalent to $4.1 million per charter. Other routes, including Middle East to Singapore and West Africa to China, have similarly seen rate hikes. Rising costs for shipping crude from the U.S. Gulf to China and product tankers for refined fuels are also reported.

(With inputs from agencies.)