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Breaking News:

OPEC Lifts Production in February

Cost Of Carrying Fuel from Mid East to Asia Grows 182%

The cost of carrying some fuels from the Middle East to Asia has jumped by 182% since January 12, Bloomberg reported on Tuesday, as the disrupted flow of traffic through the Red Sea continues to spook carriers.

The rates that some vessels are now commanding to transport naphtha from the Middle East to Asia have nearly tripled to about $83,000 per day—up from $30,000 just 11 days ago. Naptha is used in the manufacturing of gasoline and some plastics.

Multiple carrier companies have flat-out refused to make the journey through the Red Sea, instead opting to bypass the treacherous area in favor of taking the longer—more expensive—way around. Shell was one oil company that suspended—indefinitely—Red Sea shipments as the Houthis threatened more ships and the security situation became untenable.

According to Bloomberg, other routes have seen major increases as well, with freight for some fuels from South Korea to Singapore rising the most since June 2022, and rates from Middle East to East Africa jumping the most since May. Earnings from Europe to the United States are also at their highest point since March.

Late last week, media reported that tankers carrying nearly 9 million barrels of crude oil from Saudi Arabia and Iraq would be delayed, as they took the long way around via Africa. This route can add up to 2 weeks to the voyage.

The tensions in the region have intensified as the Houthis ramped up attacks on commercial shipping in the Red Sea and declared open season on any U.S. ship transiting the area, in response to last week’s U.S.-UK missile strikes on Houthi targets in Yemen—and the costs of transporting crude oil and other products are seeing an increase as a result.

By Julianne Geiger for Oilprice.com

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