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Oil producers, refiners face surging global freight rates after US sanctions
[HOUSTON] Rates to charter oil tankers from the Arab Gulf, United Kingdom and the US Gulf Coast to Asia surged to fresh highs on Friday as global oil traders grappled with a tanker shortage in the aftermath of US sanctions on units of Chinese giant COSCO.
Occidental Petroleum Corp tentatively chartered a supertanker to ship US crude from the US Gulf Coast to Asia for a record US$15.8 million this week, three sources said on Friday.
Royal Dutch Shell chartered the Suezmax vessel Amoureux this week for US$9.2 million to ship crude from Teesport, UK to Dalian, China in early November, according to a shipping source and Refinitiv Eikon data.
Shell and Occidental declined to comment.
Freight rates for supertankers from the Louisiana Offshore Oil Port in the US Gulf Coast to Singapore climbed to a record US$9.28 a barrel this week, while rates to charter supertankers from Rotterdam to Singapore climbed to a 10-year high equal to US$5.12 a barrel, according to Refinitiv Eikon data.
"Would make you choke on your Cheerios," one shipbroker said, referring to the rising freight cost.
The United States in late September imposed sanctions on two units of China's COSCO, which operates more than 50 supertankers, alleging the units violated US sanctions on Iran. Freight rates for supertankers across the globe to ship oil, particularly to Asia, have surged.
Occidental provisionally chartered the Very Large Crude Carrier (VLCC) Hong Kong Spirit for US$15.8 million for departure to Asia next month, sources said. That does not mean the voyage will actually be completed.
Bids for chartering VLCCs from the US Gulf Coast to Asia were assessed on Friday as high as US$20 million, shipbrokers said, though no charters had been booked at that price, sources said.
"The recent surge in tanker earnings is unprecedented," ship broker Poten & Partners said in a note on Friday. "As rates reach into the stratosphere, it seems that the market will take a breather sooner or later. Many of the tankers that have recently been fixed or put on subjects don't know their loading dates yet."
In the Arab Gulf, Indian Oil Corp was offered rates in a range of US$8.2 million to US$16 million to ship Iraqi Basra crude to Chennai, India, according to a source with direct knowledge of the matter.
Rates from Basra to Visakhapatnam, India, for VLCCs reached US$2.24 per barrel this week, highest in at least a year, Eikon data showed. Indian Oil did not immediately respond to a request for comment.