The global oil shipping market is undergoing a dramatic shift, with the cost of hiring the world’s largest crude tankers soaring to levels not seen in more than five years. The spike is being driven by two converging forces: new US sanctions on major Russian oil exporters and a rise in crude supply from the Middle East and the United States, reported Bloomberg.
Benchmark rates for very-large crude carriers (VLCCs), each capable of hauling up to 2 million barrels of oil from the Middle East to China, jumped to nearly $137,000 a day at the end of last week — a 576 per cent spike since the start of the year, the Bloomberg report said.
This is the highest level since April 2020 and surpasses the multiyear peak set just two weeks earlier. A wider index tracking VLCC rates across multiple routes also climbed to $116,400 a day, another five-year high.
The sharp rise comes as US sanctions on Russian exporters Rosneft PJSC and Lukoil PJSC took effect Friday, prompting refiners — particularly in India and China — to turn to alternative suppliers. At the same time, fresh barrels from the US and OPEC+ members, especially Middle Eastern producers, are becoming increasingly available, according to a note by Jefferies LLC analyst Omar Nokta.
The market shift is already showing up in vessel activity: charterers last week booked a flurry of ships for late November and December loadings, with roughly a dozen VLCCs sought for Middle East crude. The uptick in demand has pushed earnings higher across the tanker spectrum.
Smaller vessels are also riding the wave. Suezmaxes, which carry about half a VLCC’s volume, have been redirected to the Middle East to load cargoes typically handled by larger ships, Vortexa lead freight analyst Ioannis Papadimitriou noted.
Aframaxes, which move around 700,000 barrels, have benefited as well, with rates for a Middle East–Asia voyage touching $51,000 a day last week, according to Sentosa Shipbrokers in Singapore.
Adding to the tightness, a record number of refined-product tankers shifted to hauling crude earlier this month — a process known as “dirtying up” — to capture stronger profits.
With inputs from Bloomberg
