Supertanker Rates Skyrocket as Asia Rushes to Replace Russian Oil

Supertanker rates on the route between the Middle East and China hit their highest in five years as traders sought alternatives to Russian crude, Bloomberg has reported, citing a daily rate of $137,000 for last Friday.

Friday was when the latest U.S. sanctions against Russia’s two top exporters, Rosneft and Lukoil, came into effect, spurring action to secure alternative supplies for Asian markets. The daily VLCC rate represented a 576% increase since the start of the year.

VLCC rates on other routes also rose to the highest since 2020, at $116,400 a day, the report said. On routes starting from the Middle East, a dozen supertankers were contracted recently for deliveries in late November and December, Bloomberg reported. Rates for smaller tankers have also shot up as traders turn to all available vessels to transport crude.

Tanker rates have been climbing for over a month amid sanction-related disruptions that led to a surge in oil in transit. In early October, oil and condensates in transit reached 1.2 billion barrels, according to Vortexa data cited by Bloomberg. The number was the highest since at least 2016, the publication noted.

Oil in floating storage has also been on the rise due to sanctions, further shrinking the availability of tankers and boosting rates. Kpler reported recently that between August and November, Iranian oil in floating storage swelled twofold to top 36 million barrels while deliveries to Chinese buyers have declined to a rate of less than 1.2 million barrels daily, from an average 1.44 million barrels daily earlier in the year.

In Asia, oil in floating storage soared by 20 million barrels over the past two months, to reach a total of 53 million barrels, Reuters reported earlier this month, citing Kpler data. A lot of that oil came from the three sanctioned oil producers: Russia, Iran, and Venezuela.

By Irina Slav for Oilprice.com

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