Shipping rates for oil tankers leaving the United States bound for Asia jumped to three-year highs after Washington sanctioned several Chinese tanker operators for alleged violations of Iran oil sanctions.
Reuters reports, citing ship brokers and traders, that this week's suggested freight rates for a Very Large Crude Carrier leaving the Gulf Coast for China had reached $9.8 million. That's up from $6.2 million in early September, according to data from ship brokers McQuilling Services.
"To attract a ship to ballast (into the Atlantic market) it's going to cost about $10 million," one ship broker told the news agency.
Last Friday, a $9.5-million deal to book a VLCC from the Gulf Coast to China for a division of French Total fell through, although the Reuters sources did not specify whether the reason was the freight rate.
The Treasury Department in late September sanctioned a number of Chinese tanker operators for continuing to ship Iranian oil despite U.S. sanctions against Tehran focusing specifically on its oil exports.
"We are imposing sanctions on certain Chinese firms for knowingly engaging in a significant transaction for the transport of oil from Iran, including knowledge of sanctionable conduct, contrary to U.S. sanctions," U.S. Secretary of State Mike Pompeo said at the time.
At the time, Bloomberg reported that oil traders in China were cancelling orders they had placed with the freshly sanctioned companies, with uncertainty rife about the oil already travelling on such tankers to its destinations.
Now, it seems, U.S. oil exports will be affected by the fallout.
"People are nervous about locking freight in at these high levels, which is why the last week has been so quiet," one trader from the U.S. told Reuters. The failed deal for the VLCC for Total's unit was the only one involving a supertanker for Asia this week.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
Yesterday, Turkish President Recep Tayyip Erdogan openly defied the United States by announcing that it is impossible for Turkey to stop importing Iranian crude oil and natural gas.
President Trump is well advised to cut his losses and end the trade war otherwise he will be jeopardizing his chances in the 2020 presidential elections and harming the global economy senselessly.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London