Crude oil tanker shipping rates reach historic highs

Crude oil tanker freight rates have reached unprecedented levels, according to a market report from Poten & Partners. On key routes for Very Large Crude Carriers (VLCC), such as the Arabian Gulf to the Far East, shipping costs have seen a massive surge compared to earlier in the year.

In January, VLCC rates for the benchmark AG-Far East route were approximately US$30,000 per day. By early October, these rates climbed to roughly US$1.3 million per day, representing a more than 43-fold increase. This spike adds an estimated US$33 per barrel in shipping costs, accounting for about 27% of the delivered cost of crude.

The surge in rates is partly attributed to increased negotiating leverage for tanker owners. Recent industry consolidation has resulted in the top 10 VLCC owners controlling approximately 48% of the non-sanctioned mainstream tanker fleet.