Shipping Rates for Mideast Oil Surging

Oil tanker owners are raising the prices they charge to export Middle East crude as tensions surge in a region that accounts for about a third of all seaborne petroleum shipments.

Rates for transporting 2 million barrels cargoes from Saudi Arabia to China jumped to almost $26,000 a day, more than double where they were at the start of June, according to Baltic Exchange in London, Bloomberg reported.

Shipbrokers report a surplus of vessels in the Persian Gulf, indicating that owners are reluctant to accept charters at low rates given the current risks.

“Nothing much has changed in terms of supply and demand since the latest attacks, so it’s pretty much all a risk premium,” said Halvor Ellefsen, a shipbroker at Fearnleys London.

A survey of shipbrokers involved in the Middle East trade shows they anticipate there being 22% more ships available for charter in the next four weeks than probable cargoes. That’s a smaller surplus than last week but still higher than normal for the time of year.

Despite the glut, vessel owners including Frontline Ltd., one of the world’s biggest operators of supertankers, briefly paused charters in the immediate aftermath of the latest round of attacks in the region last week.

Insurance rates also soared after those incidents, with companies charging at least $180,000 in premiums to go to the Persian Gulf. They were about $30,000 early this year before tensions began to escalate.