Shipping Crude to Asia Has Never Been More Expensive, US Sanctions to Blame

US sanctions have taken 300 tankers, 3% of the global fleet, off trading markets

Nearly 300 oil tankers globally have been placed off limits as companies fear violating U.S. sanctions against Iran and Venezuela, driving freight rates to new highs, industry sources said.

The move has taken roughly 3% of the global oil tanker fleet out of the market, according to industry sources and data on Refinitiv Eikon, sending rates soaring to secure tankers to ship oil, particularly to Asia.

“Freight rates are going through the roof and people are getting very nervous with the cost of shipping,” a crude oil trader in Asia said on Friday, declining to be identified as he was not authorised to talk to media.

Unipec, the trading arm of China’s Sinopec, Swiss trader Trafigura AG, oil firm Equinor ASA , Exxon Mobil Corp are shunning 250 crude and oil products tankers which have carried Venezuelan oil in the past year.

Oil companies are also avoiding 43 oil tankers owned by COSCO Shipping Tanker (Dalian) after the United States last month imposed sanctions on two units of Chinese shipping giant COSCO for allegedly transporting Iranian crude.

COSCO Dalian also owns 3% of the global very large crude carrier (VLCC) fleet and the absence of its ships was a key driver for supertanker freight rates which hit new highs daily over the past two weeks, traders and shipbrokers said.

“This is now a handicapped set of vessels which are difficult to trade,” Anoop Singh, regional head of tanker research at ship broker Braemar ACM, said, referring to the COSCO Dalian tankers.

Disruptions from the recent attacks on Saudi oil facilities and the ban on ships that called on Venezuelan ports in the past year have exacerbated tightness in the tanker market, he added. Braemar estimates another 23 VLCCs are also out of service to install emissions cleaning equipment to meet stricter global marine fuel rules from January 2020.

VLCC freight rates for key crude oil supply routes to Asia have surged since the U.S. ratcheted up sanctions in recent months.

The Singapore Petroleum Co, wholly owned by PetroChina, has provisionally chartered VLCC Houston to load crude in the Middle East for China in early November at 205 Worldscale points, in what could be the highest rate so far in the market, a trade source who tracks the market closely said on Friday.

The rate was at W67 prior to sanctions, according to a shipbroker.

VLCC rates for U.S. Gulf to Asia, the longest crude oil shipping route globally, hit a new high of $14 million this week, raising costs for oil buyers in Asia.

Source: Marine Link

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CHUCKMAN
4 months ago

Marko,

I think the new title for the publication is a bit of a mistake.

I’ve read your remarks, and generally I agree with their drift, but they do miss something.

“Checkpoint Asia” has a more authoritative sound than “Anti-Empire,” which immediately strikes me as more advocative and combative rather than informative.

Just thought you might like to know.

Vish
Vish
4 months ago

This increase in shipping crude oil to Asia is by design, and it is part of America’s economic war against China–as well as of course against Iran and Venezuela.

American sanctions are a form of economic terrorism, though they are always disguised behind US propaganda justifications like “weapons of mass destruction” (as in the case of Iran and its civilian nuclear program) or “democracy and freedom” (as in the case of Venezuela and the USA-backed coup attempts there).

In the past, Europeans would lay siege to medieval villages as of their siege warfare tactics.

Today, America lays siege to entire nations in order to sanction them into submission.

Sick, demented, and barbaric behavior–but concealed behind arrogant posturing and moralizing about liberty and human rights.

That’s the American Way.

Internal US Gov’t Document Outlines Program of ‘Economic Warfare’ on Venezuela
https://thegrayzone.com/2019/01/30/us-economic-warfare-venezuela/

Mary E
4 months ago
Reply to  Vish

Good remarks on the Evil Empire and how it is tearing the world apart by sanctions…which the rest do NOT have to adhere to really…they could go with Rusia and China using currency other than the $USD…and for their sakes, should.
thanks for link to gray zone!

CHUCKMAN
4 months ago
Reply to  Vish

Well said,

JustPassingThrough
JustPassingThrough
4 months ago

the murikans contribution to the fight against global warming.
bravo.

Anti-Empire