Oil tanker rates show rising price pressure already evident in container rates
February 16, 2024
Key Observations:
The oil price consequences of Red Sea diversions are becoming more evident.
Today, the very large crude carrier (VLCC) tanker rate on the West Africa to China route is quoted at $3.76 per barrel. That cost was at $3.52 two days ago and $2.82 two weeks ago. Normal for this time of year: $2.20.
There is a mild seasonal that supports tanker rates each spring and a stronger one that tends to lift tanker rates each autumn, as the chart below shows. The spring uplift is normally about +10%; this month's increase is already more than 38%.
Larger-than-normal uplifts are visible across the global tanker market. Arabian Gulf to Red Sea is now $1.45 per bbl, +$0.30 from three days ago. The normal rate is $0.85.
These increases follow the worldview surge in container rates, also prompted by Red Sea avoidance. For example, the benchmark container rate on the Shanghai to Los Angeles route is now $4,754 per forty-foot box, up from $1,939 in the first week of Dec-23 and an average rate of $2,021 in Feb-23, according to Drewry.
Source: Bloomberg, Drewry, Blacklight Research.
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