Middle East Oil Crisis Sends Supertanker Prices to Record Highs
Middle Eastern oil producers are scrambling to secure their own shipping capacity as the Strait of Hormuz crisis drives tanker prices and charter rates to record highs.
Demand for tankers from Middle Eastern oil producers has pushed prices to an all-time high, the Financial Times reported today, saying both new and second-hand very large crude carriers reached prices of over $130 million in the second quarter of the year. Citing data from shipbroking company Braemar, the FT also said the prices for chartering a supertanker for a year have also hit the highest on record. “Physical control of assets is also important for some exporters in the Middle East,” Braemar’s head of sale and purchase, David Holland, told the Financial Times. The demand surge is driven by oil-producing countries’ shift to using their own tanker fleet to move the oil amid growing unease among shipping majors to dare the Strait of Hormuz as attacks on vessels in the waterway remain frequent.
Earlier this month, ADNOC bought six supertankers and five very large gas carriers, for a combined price of $1.3 billion. All the vessels are set to be deployed immediately upon delivery. The fact that it owns its tankers and gas carriers has been of major help to ADNOC in maintaining its oil exports from the Persian Gulf despite the Iranian blockade.
As the FT reported, the company—and fellow state oil major Kuwait Petroleum—have begun using shuttles to send their oil to tankers waiting in the Gulf of Oman. The UAE’s oil major also plans more purchases, with the chief executive of the company’s logistics and services division saying recently it would make “big investments in second-hand vessels to support Adnoc Group companies.” Unlike the UAE, however, Iraq does not have its own tankers and has to rely on international oil traders and buyers to move the crude. As a result, it has had to offer deep discounts to the commodity to motivate buyers to make the risky passage of Hormuz. By Irina Slav for Oilprice.com
