Gulf oil tanker rates shatter records as Strait of Hormuz deal triggers a rush

Shortage of vessels

The situation has contributed to a shortage of available vessels even as Middle Eastern crude producers ⁠ramp up exports.

Amid this shortage, the rates for hiring a tanker outside the Hormuz jumped to $190,500 a day from $106,500 a week ago, according to ship brokers, who added that similar surge was witnessed by those hired outside the Gulf region.

Average daily earnings for Very Large Crude Carriers (VLCCs) also jumped to a record of nearly $470,000 a day for cargoes inside the Gulf that need to pass through the Hormuz — a rise by over $50,000 from a week ago, Reuters reported quoting estimates.

“Tanker owners are preparing for an influx of Middle East crude cargoes in the coming weeks and are emboldened by the fact that spot TCEs (earnings) averaged above $100,000/day ⁠despite the loss of … cargo volume ⁠since the US-Iran hostilities commenced,” ship broker Clarksons stated in a note.

“This indicates the (tanker) supply side remains exceptionally tight and a re-opening of Hormuz would tighten capacity further,” ⁠the note, accessed by Reuters, read.

Middle East produces ramp up exports

Middle Eastern producers, especially the Abu Dhabi National ​Oil Company, meanwhile, are offering crude in a flurry of tenders this June, urging buyers to load from inside the Gulf, which has led to a spur in demand for tankers.

Buyers in India, including its biggest refiner Reliance, are also seeking crude from the region after months of disruption in supplies.

However, even as oil tanker rates rise, war risk insurance costs have softened in ⁠the last five days to around 3 per cent of the value of a ship from around 5 per cent over a week ago, Reuters noted.

This excludes discounts, insurance industry sources told the news agency, which means a reduction in hundreds of thousands ‌of dollars in ⁠insurance costs for ships.

Oil prices fall

Oil prices dropped on Wednesday — trading near four-month lows — even as oil tankers stranded in the Gulf since the start of the Iran war are gearing up to move out of the Strait of Hormuz.

Brent crude futures were down 0.96%, at $76.34 a barrel as of 12:12 IST, and US West Texas Intermediate slipped 0.89%, ​to $72.59 a barrel, according to oilprice.com.