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Prices to charter large oil tankers sailing through the critical Strait of Hormuz have more than doubled since Israel launched an attack on Iran last week, amid shipowners’ reluctance to risk using the waterway.
The price to charter a very large crude carrier — capable of carrying 2mn barrels of oil — from the Gulf to China leapt from $19,998 a day last Wednesday, two days before Israel’s attack, to $47,609 on Wednesday this week, according to figures from Clarksons Research.
The rise on the route has far outpaced a 12 per cent increase in the wider Baltic Dirty Tanker Index of crude oil tanker rates globally over the same period.
Shipowners were holding back and owners were expecting “higher earnings in their future” from even higher charter rates, said Joakim Hannisdahl, founder of Gersemi Asset Management, a shipping hedge fund manager.
Rates to charter a large long range 2 tanker carrying oil products from the Gulf to China rose from $21,097 a day last Wednesday to $51,879 this Wednesday, according to Clarksons.
Richard Fulford-Smith, who runs Eden Ocean, an investment firm, said sentiment had been hit partly by concerns over Iran’s ability to maintain its crude exports during the conflict.
Because Iran is under international sanctions, all its exports travel on a so-called “dark fleet” of ships operating outside the normal international rules on insurance and safety certification. However, there is speculation in the market that some customers are instead choosing to buy from other oil-exporting countries that use mainstream, legitimate vessels, pushing up charter rates.
“If you take away the Iranian ships completely, you’re going to be needing more ships from the regular fleet,” Fulford-Smith said.
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Lars Barstad, chief executive of Frontline, the world’s largely publicly listed oil tanker operator, last week told the Financial Times he expected the attack on Iran to prompt a shift towards buying from other Gulf exporters and away from the dark fleet.
However, Stephen Gordon, managing director of London-based Clarksons Research, said there were no indications that Israeli attacks had hit Iran’s oil-exporting capability.
“Tanker freight rates on routes out of the Middle East have risen sharply over recent days, with some owners wanting to avoid the region, or demand higher risk premiums to operate in the area,” Gordon said. “However, oil flows from the region have continued.”
The dangers of using the strait were underlined on Tuesday when Frontline’s Front Eagle, on a voyage out of the Gulf, collided with a dark fleet tanker just after leaving the strategic waterway. There were no casualties.
