US crude oil shipping cost to Asia at historic peak

With deepening supply disruptions in the Middle East, the cost of transporting US crude oil to Asia has reached an all-time high, with mega tanker charter fees climbing to $44.8 million.

Record Increase in Transportation Costs

According to Baltic Exchange data, the cost of chartering a very large crude carrier to transport two million barrels of crude oil from the US Gulf Coast to China reached approximately $44.8 million on Tuesday.

This figure points to an all-time high, demonstrating a very sharp increase compared to the $39 million figure recorded just a day prior.

Comparison with the Pre-War Period

In the period immediately preceding the start of the war with Iran at the end of February, the cost of transporting the same amount of oil to Asia was around $17.8 million.

Advantage Over Alternative Cargoes

US crude oil shipments to Asia continue to remain economical thanks to still being lower in cost compared to alternative cargoes such as the United Arab Emirates' Murban crude.

As long as this price advantage is maintained, Asian buyers are expected to continue bearing these abnormally high transportation costs.

Global Tanker Freight Rates and Risks

This surge in oil transportation costs from the Gulf Coast coincides with a period when global tanker freight rates are also rising, and there are very few signs that this momentum will change anytime soon.

The number of ships willing to pass through routes carrying the risk of attack, including the Strait of Hormuz, is decreasing day by day.

Refinery Demand and Profitability

Strong fuel demand is prompting refineries to continue purchasing and transporting the crude oil they can access, maintaining the supply chain.

Refineries are still managing to make a profit even in this high-cost environment by converting the crude oil they secure into finished fuels such as diesel and gasoline.