Global oil, gas shipping rates surge to record highs

Global oil and gas shipping rates have surged to record levels as tensions between the United States and Iran escalated, disrupting traffic through the Strait of Hormuz and driving up energy prices worldwide.

Freight rates for very large crude carriers transporting two million barrels of oil from the Middle East to China climbed to a record Worldscale level of 419 on Monday, equivalent to $423,736 per day, according to LSEG data. The benchmark route, known as TD3, has doubled since Friday, extending gains from a six year high recorded last week.

Liquefied natural gas shipping rates also jumped sharply after Qatar halted production. Atlantic LNG tanker rates rose 43 per cent to $61,500 per day, while Pacific rates increased 45 per cent to $41,000 per day, according to Spark Commodities. Analysts at Wood Mackenzie said spot LNG shipping rates could exceed $100,000 per day this week amid tight vessel availability and a backlog of cargoes.

Shipping through the vital waterway between Iran and Oman, which carries around one fifth of global oil consumption and significant volumes of liquefied natural gas, has slowed sharply after vessels were struck during Iran’s retaliation for US and Israeli attacks. Tehran said it had closed the strait and would target any ship attempting to pass, according to Iranian media, while the US military’s Central Command said the route remains open, Fox News reported.

The disruption has pushed Brent crude futures up nearly 10 per cent this week and lifted European natural gas prices, as multiple oil and gas facilities across the Middle East shut down on precautionary grounds.

Shipbrokers said it remains difficult to assess freight levels as several owners have suspended operations in the Gulf. South Korea’s Hyundai Glovis said it is preparing contingency plans, including securing alternative routes and ports, while Seoul’s maritime ministry urged domestic shippers to refrain from operating in the region and is reviewing additional safety measures.

Attribution: Reuters