The record-high freight costs refiners have to pay to receive a cargo of crude oil from the U.S. Gulf Coast have effectively shut the arbitrage to Asia, with refiners in the top crude oil-importing region turning to more barrels from the Middle East and South America, shipbrokers and traders have told Reuters.
U.S. crude, which had come to the rescue of the Asian refiners during most of the Iran war, is now out of reach in Asia because the economics of paying $80 million to have a cargo of crude oil shipped from the U.S. Gulf Coast simply don’t work.
This week, market chatter signaled that the U.S .-Asia freight rates have smashed the records, set just days ago, as the tanker market continues to reel from a shortage of vessels because many ships are tied in highly inefficient trades to work around the constraints at the Strait of Hormuz.
Commodity trading giant Trafigura has reportedly chartered a supertanker to ship crude oil from the U.S. Gulf Coast to China at a lump-sum fee of $76 million, a source with knowledge of the fixture told CNBC this week.
The $76-million tanker fee is ten times higher than the $7 million to $10 million before the war. This suggests the freight cost of the journey has now jumped to about $38 per barrel of oil.
Rates on the U.S. Gulf-to-Japan route are also skyrocketing, and one supertanker has been reportedly offered at a total fee of $82 million for the journey, up by 50% from just three weeks ago, Bloomberg reported this week.
With the US-Asia arbitrage closed for the time being, Asian refiners consider buying more of the United Arab Emirates’ Murban grade. Increased interest hiked the premium of Murban crude over the Dubai quotes to more than $11 per barrel on Thursday.
By Tsvetana Paraskova for Oilprice.com
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