Surging tanker rates have made American crude oil pricing unappealing for Asian refiners, leading them to seek supplies from the Middle East and South America instead.
In early October, the cost to charter a supertanker to transport two million barrels of U.S. crude from the Gulf of Mexico to China in November hit $80 million, as reported by Reuters, referencing information from shipbroker Simpson, Spence Young.
This amounts to around $40 per barrel in shipping costs, a significant rise from $8.60 prior to the outbreak of the Iran war in February, according to the report.
The high freight costs have essentially closed the door on profitable shipments of U.S. crude to Asia, traders and shipbrokers who requested anonymity revealed to Reuters.
The American Petroleum Institute did not immediately respond to a request for comment.
Japanese company Cosmo Oil has provisionally booked a supertanker for a U.S. cargo scheduled to load between November 19-21 for $81 million, while South Korea’s SK Energy and trading firm Trafigura submitted bids that fell short, ranging from $76 million to $77 million, sources indicated to Reuters.
Trafigura declined to provide details about specific chartering transactions.
Max Pyziur, who leads research programs at the Energy Policy Research Foundation, commented that “energy market stress is also evident in maritime freight.” He noted issues like damaged vessels and the compromised choke points of Hormuz and Bab el-Mandeb are leading to the use of alternative routes, such as around the Cape of Good Hope.
“These rerouted paths increase delivery times for all types of liquid hydrocarbons,” he added.
June Goh, a senior analyst at Sparta Commodities, shared with Reuters that tanker rates for the U.S. Gulf-to-Asia route have skyrocketed by over 300 percent since mid-August. She attributed this to inefficient ship-to-ship operations to navigate the Strait of Hormuz situation and a decrease in available tankers due to rising crude traffic from the Atlantic Basin heading east.
Asian refiners are considering options like Murban crude from the UAE, which has seen its price premium over Dubai benchmarks exceed $11 per barrel recently. Traders are also looking into Argentina’s Medanito crude.
Following the closure of the Strait of Hormuz, U.S. crude exports reached record levels, jumping from 4 million barrels per day in February to an average of 5.2 million in May, according to Dallas Fed economists.
In the week concluding on October 2, exports averaged approximately 4.8 million barrels per day, according to Energy Information Administration data.
Hurricane Isaias, which is expected to make landfall on the Gulf Coast soon, may add further delays to shipments.
“We can expect some disruptions in U.S. exports due to vessels waiting out the storm before approaching Houston and other Gulf ports,” remarked Ellen Wald, a senior fellow at the Atlantic Council’s Global Energy Center.
Some trading companies are opting for smaller tankers, as reported by Reuters. For instance, Trafigura chartered the Torm Hilde, capable of carrying about 600,000 barrels, for $24 million to load U.S. oil for shipment to Japan on November 1.
