Charter rates for oil tankers from the Middle East to Asia surged as escalating conflict between Israel and Iran raised fears of disruption, industry sources told Reuters. The benchmark VLCC route from the Middle East Gulf to Japan (TD3) jumped over 20 per cent on Friday, holding steady around W55 on Monday, according to LSEG and shipbroker data.
Market activity slowed sharply, with bookings nearly coming to a halt on Friday as participants adopted a cautious stance. While the Strait of Hormuz remains open, traders remain on edge, anticipating further updates as the week progresses.
Analysts expect freight rates to rise further, especially if Iran takes action on the Strait of Hormuz, a key artery for nearly 19 million barrels per day of oil and products. War risk premiums and cargo insurance costs could spike by $3 to $8 per barrel in case of further escalation.
Clean product freight rates for 90,000-ton cargoes from the Gulf to west of Suez were previously quoted at $3.3 million to $3.5 million but may climb to $4.5 million, sources said. According to Reuters, uncertainty has led many shipowners to pause vessel offerings, potentially boosting alternative routes from the Far East and northwest India.
Attribution: Reuters
Subediting: M. S. Salama