Glencore is divesting its stake…
Devon Energy and Enerplus are…
The cost of chartering supertankers to carry crude oil from the Middle East to Asia soared by double digits overnight on Friday as oil traders and shippers scramble to understand the extent and impact of the U.S. sanctions on several Chinese tanker owners for shipping Iranian oil, including units of Cosco, the owner of 7.5 percent of the global supertanker fleet.
Oil traders around the world began scrambling on Thursday to avoid being involved in the latest U.S. sanctions regarding Iranian oil after the United States imposed on Wednesday sanctions on a number of Chinese tanker owning firms and executives for transporting Iranian oil in violation of the U.S. sanctions on the Islamic Republic.
“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 on Wednesday, while the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a list of companies, including units of Cosco, which are now sanctioned for knowingly dealing with Iranian oil.
“We will take action on any sanctionable Iranian oil transaction,” Secretary Pompeo said on Twitter in a pledge that the U.S. would continue to track down and sanction anyone importing and dealing with oil coming from Iran.
The U.S. sanctions threw the oil shipping and trading markets into chaos and sent charter rates soaring, industry and shipping sources told Reuters.
The charter rates for supertankers, the so-called very large crude carriers (VLCCs), from the Middle East to north Asia for October soared by almost 19 percent overnight, according to the sources.
The rates for a Middle East-India’s west coast route surged by 28 percent, industry sources told Reuters.
Overall, the global oil shipping market is holding off from booking China-owned supertankers, and shippers and traders are checking with legal teams how to proceed and how to avoid being inadvertently dragged into dealing with a sanctioned tanker or tanker owning firm, analysts and shipbrokers tell Reuters.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.