Fuel Tanker Rates Soar Over Israel-Iran Conflict
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The cost of hauling refined oil out of the Middle East surged on June 17 as shippers reacted to the conflict between Israel and Iran.
Rates for shipping large cargoes of fuel from the Persian Gulf to Japan almost doubled to more than $55,000 a day, data from the Baltic Exchange shows.
The cost of moving product to East Africa and northwest Europe from the Middle East also soared.
“We are seeing strong demand for near-term cargoes in the Middle East,” said Torm Plc, one of the world’s largest owners and operators of product tankers. “The uptick remains centered on the Middle East — other markets may be affected if momentum continues.”
READ MORE:Diesel Prices Surge as Israel-Iran War Pressures Market
Rates had already jumped since the Israel-Iran conflict began late last week, but the June 17 increase on the route to Japan was much bigger. Some tanker owners and managers had already paused offering vessels as they assessed the risks.
As well as affecting shippers’ bottom lines, such sharp jumps in the cost of hauling fuels will also ripple through the wider petroleum markets. Persian Gulf exports of diesel are almost 1.4 million barrels a day, while naphtha shipments are about 1.2 million, according to a report from FGE NexantECA, citing Kpler. Exports of liquefied petroleum gas are even larger, while there are also significant volumes of fuel oil.
Written by Yongchang Chin, Nicholas Lua and Jack Wittels
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