The increase in international shipping costs is shocking!
According to relevant market information, the economic momentum for exporting oil from the Gulf Coast of the United States to Asia weakened last week due to a surge in booking volumes for super tankers on this route, leading to soaring rental costs.
Jefferies analyst Omar Nokta stated in a report that the high-level crude oil spot trading activity in the US Gulf of Mexico has tightened the supply of ships in the Atlantic Basin and led to higher rates“
South Korean shipowner Sinokor Merchant Marine recently booked four VLCCs for oil transportation from the United States to China, exacerbating the shortage of available vessels in the oil tanker market. The rental prices for these VLCCs range from 8.39 million to 9.7 million US dollars.
"The increase in shipping costs is shocking," said a trader at a refinery in Singapore. The direct result is that US crude oil is no longer competitive in Asia.
Due to the sudden increase in freight prices, the competitiveness of US crude oil in the Asian market has declined, which caught market participants off guard. Therefore, it is expected that some refiners will modify their shipment volumes to accommodate larger purchases of crude oil from the Middle East and Saudi Arabia.
It is reported that Saudi Arabia, the largest crude oil producer in the Middle East, has lowered its official selling price for Asia in February, which is expected to benefit other crude oils in the Middle East. The growth in demand for Middle Eastern crude oil may support regional oil prices, which have been very low for several months prior to this.
According to data from ship brokerage Simpson Spence&Young displayed by traders and LSEG on the Eikon terminal, the cost of renting a VLCC capable of carrying 2 million barrels of oil from the United States to Asia last week has increased by more than 20% from last week's rent of about $8 million to about $10 million.
Traders say that the increase in shipping costs has led to a premium of over $4 per barrel for the April delivery cost plus shipping quote of New York Futures compared to Dubai's quote, up from around $2 last week.
Several traders have stated that this has resulted in New York futures oil being $1 higher per barrel compared to Murban crude oil in the United Arab Emirates, while last week it was flat or slightly lower.
According to Kpler data, crude oil shipments to the United States reached a historic high last year. But after the increase in Murban crude oil exports, the shipment volume of US crude oil in January may decrease. And with the increase in shipping costs, this trend may continue in the short term.