Crude oil freight rates rise

Business | 8 Jan 2020 1:57 pm

Owners of oil tankers are boosting their rates to haul crude on a key route from the Middle East as risks in the Gulf escalate after Iran retaliated against the U.S. killing of a top general, Bloomberg reports.

Some shipowners are offering rates for supertankers carrying crude from the Persian Gulf to China at between 165 and 180 in Worldscale terms, according to shipbrokers and oil traders in Asia.

There have been no fixtures reported at that level yet, they said, asking not to be identified because they’re not authorized to speak to the media. Earlier this week, ships for the route were provisionally chartered at between 140 and 150 Worldscale points, an industry standard used in the negotiations of freight costs, up from about 122 before the U.S. airstrikes on Friday.

The rise in costs for the key shipping route shows how the escalating conflict between the U.S. and Iran is spilling over into global oil supply chains.

“In a situation like this, it’s not surprising that shipowners are charging higher freight rates, because they have to protect their balance sheets in anticipation of insurance premiums rising,” said Tilak Doshi, a visiting fellow at the NUS Middle East Institute in Singapore who previously worked at Saudi Aramco and Louis Dreyfus Energy.

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