The freight rate for a supertanker carrying crude oil on the key Middle East-to-China route hit a record high of more than $420,000 per day on Monday as the war in the Middle East disrupts the world’s busiest and most important shipping lane, the Strait of Hormuz.
The daily rate for hiring a very large crude carrier (VLCC), which is capable of shipping about 2 million barrels of crude, hit an all-time high of $423,736 on Monday, according to Baltic Exchange’s so-called TD3C MEG-China index.
The tanker rates for all other trade routes and tanker types are also soaring as the Strait of Hormuz is effectively closed with companies and shippers diverting vessels or idling in waters near the vital oil and gas shipping lane. Oil and LNG tanker traffic is now halted through the narrow lane between Iran and Oman, where a fifth of global oil and LNG flows pass.
On Monday, Iran claimed that the Strait of Hormuz has been closed, and Ebrahim Jabbari, a senior adviser to the Commander-in-Chief of IRGC, was quoted as saying that Iran would “attack and set ablaze any ship attempting to cross.”
The U.S. Central Command denies the Strait is closed, a senior U.S. military official told Fox News.
Iran is neither patrolling nor enforcing its claimed “closure,” and there has been no evidence of mines in the waterway, the official said. It is unlikely that Iran would mine the Strait, considering that about 80% of its oil exports need to pass through the Strait of Hormuz to go to China, according to the official who spoke to Fox News.
As a result of the widening conflict and insurers ending war risk coverage as of March 5, the global average supertanker rates have also surged—to $280,941 per day as of Monday, the highest level since at least 2008, according to Lloyd’s List.
LNG shipping rates also soared as Qatar, the world’s second-biggest LNG exporter accounting for about 20% of export capacity, halted production on Monday, roiling global gas markets.
The daily rate for a LNG tanker surged by 40% on Monday alone.
By Tsvetana Paraskova for Oilprice.com
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