Introduction
The maritime industry is experiencing significant shifts due to recent US sanctions on Russia. These sanctions have doubled the cost of hiring oil supertankers on key routes to China, highlighting the profound impact on the global shipping market.
Impact of Sanctions on Freight Market
The sanctions have disrupted a freight market that was previously dealing with softer demand due to supply curbs, a slow Chinese economy, and easing Middle East tensions. While the number of confirmed journeys hasn’t changed much, the pool of available ships has rapidly shrunk, leading to intense competition on certain routes.
Rising Rates for VLCCs
Daily rates for very-large crude carriers (VLCCs) on the Middle East-to-China route surged 112% to $57,589 after Washington sanctioned nearly 160 tankers hauling Russian crude. Rates for the US Gulf-to-China and West Africa-to-China routes also saw significant increases.
Increased Demand for Crude Oil
- Major Chinese refiners are rushing to buy crude from the Middle East, Africa, and the Americas to compensate for the loss of Russian oil.
- A VLCC from the US Gulf to China was recently hired for $9.5 million, up from the previous range of low-$7 million.
- Indian Oil Corp. is also increasing its purchases of Middle Eastern barrels, adding to the pressure.
Potential Future Impacts
There is concern that tanker rates could remain elevated if President-elect Donald Trump takes a tougher line against Iranian oil shipments. Analysts predict that rates could hold at these levels if Trump increases pressure on Iranian oil shipments.
Impact on Smaller Vessels
The rising demand for VLCCs is also affecting costs for smaller vessels. Rates for Suezmaxes, which hold about 1 million barrels, have climbed due to increased demand and tight supply, according to shipbroker SSY.
Conclusion
The US sanctions on Russia have significantly impacted the global shipping market, particularly the rates for supertankers on key routes to China. The maritime industry must adapt to these changes and prepare for potential future impacts.
Sources:
- Oil Supertanker Rates on China Routes Double Since Sanctions
- Supertanker Rates on China Routes Double Since Sanctions
- Oil Supertanker Rates on China Routes Double Since Sanctions – Clipper Oil
- oil tanker Archives – FullAvanteNews
- Mexican tariffs a ‘smart signal’ that duty-free loophole is closing
- Monday, January 20, 2025 – McAlvany Financial Group
- Oil Supertanker Rates on China Routes Double Since Sanctions
- Oil Supertanker Rates on China Routes Double Since Sanctions
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