Oil supertankers in Gulf are renting for $500,000 per day: Report
Supertanker owners are getting paid $510,000 per day to bring crude oil from the Gulf to Asia, in a sign of high demand for vessels to transit the waterway as fighting rages in the region and alternative routes take supply from the market.
Bloomberg reported on Wednesday that earnings from the Middle East-to-China route have jumped to their highest level since June.
The rising figure suggests that demand for vessels is high and some are risking the threat of war to take profits.
“Right now, the strait is open. A lot of boats are coming through. People aren’t reporting that," US President Donald Trump said on Wednesday.
One vessel, a very large crude carrier (VLCC), the Mongolia Prosperity, operated by South Korean shipowner Sinokor, is set to load crude from an unnamed Persian Gulf port for delivery to East Asia, with the voyage costing $31m, Bloomberg reported.
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A ceasefire struck in April amid the US-Israeli war on Iran, and extended in June, is all but defunct in the Strait of Hormuz, with each side trying to impose its own blockade.
The US military fired on a Panama-flagged container ship earlier this month that it said attempted to transit the Gulf of Oman to an Iranian port.
Meanwhile, at least one sailor was killed this week in Iranian attacks on vessels transiting the water, the Joint Maritime Information Centre, a multinational organisation, said.
But Gulf states are still trying to export millions of barrels of oil to customers in Asia.
The fighting means that shipowners willing to brave the risk stand to make handsome profits with demand high and the supply of vessels low.
The Breakwave Tanker Shipping ETF (BWET), which allows investors to bet on the price of crude oil freight futures, is up a whopping 2,200 percent since the start of the year. BWET surged after the US and Israel attacked Iran in April, then fell when the ceasefire was declared. But it has soared in value over the summer as investors bet against an end to fighting in Hormuz.
Yemen’s Houthis have restarted attacking vessels in the Red Sea. To avoid the Bab el-Mandeb chokepoint, Saudi Arabia has had to send oil via the Sumed Pipeline to the Mediterranean, where it is loaded onto VLCC tankers. The vessels take a longer route around the tip of Africa, reducing the supply of ships available in the market and driving up prices.
The Trump administration has insisted that the Strait of Hormuz is open and that more vessels are transiting the waterway than is being publicly reported.
The UAE boosted oil production to an all-time high in June, pumping 4.1 million barrels per day, the International Energy Agency said in a July report. The UAE has taken a risk-prone approach to sending vessels through the Strait of Hormuz, with its ship-tracking signals turned off.
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