Tanker costs hit 17-year high as Gulf exporters race to move oil

Soaring demand for oil tankers to transport crude out of the Persian Gulf has pushed vessel prices and charter rates to record levels as Middle Eastern producers seek to maintain exports despite continued attacks on shipping in the Strait of Hormuz, Financial Times reports.

According to shipbroker Braemar, prices for new-build and modern second-hand tankers in the largest vessel class exceeded $130 million in the past quarter, the highest level since 2008. Annual charter rates for supertankers have also reached historic highs.

Oil-producing countries are increasingly seeking control over their own shipping capacity to ensure crude can reach international markets. David Holland, Braemar’s head of sale and purchase, said exporters were partly driving demand for vessels.

“Physical control of assets is also important for some exporters in the Middle East,” Holland said.

Countries without their own tanker fleets, including Iraq, have been offering deeper-than-usual discounts to persuade buyers to accept the risks of transporting crude through the Strait of Hormuz.

Abu Dhabi National Oil Co. (Adnoc) and Kuwait Petroleum Corp. have established shuttle operations to move crude through the strait to tankers waiting on the other side.

Adnoc Logistics & Services CEO Abdulkareem Al Masabi said the company planned to make “big investments in second-hand vessels to support Adnoc Group companies.” Adnoc purchased six oil supertankers and five large gas carriers for $1.3 billion in August, with the vessels immediately deployed to support its operations.

Saudi Arabia also appears to be strengthening its tanker capacity. Saudi Aramco recently offered Asian customers crude grades that can only be shipped through the strait, while shipping company Bahri said its fleet had reached a record 107 vessels.

Meanwhile, Clarksons reported that spot-market earnings for the largest oil tankers rose 20% this week. It said higher-risk routes were commanding significantly higher rates, with Red Sea-China voyages reaching around $318,000 per day and journeys from inside Hormuz to China exceeding $550,000 per day.

Only 29 tankers account for more than half of all voyages through the strait, according to Vortexa.

“Gulf exports continue to move, but the structure supporting those flows has changed. The highest-risk part of the journey is increasingly concentrated among a relatively small group of repeat vessels,” said Claire Jungman, Vortexa’s director of marine risk and intelligence.

By Vafa Guliyeva