Rates for mid-sized oil tankers sailing from the U.S. Gulf of Mexico to Europe hit the $57,000-per-day level this week, a figure representing a 12X increase since January and a two-year high, according to Bloomberg citing Aframax vessel data.
The dramatic increase in shipping rates from the U.S. to Europe reflects a shortage of vessels and a diversion of product to different markets due to sanctions and Russia’s war on Ukraine.
On Tuesday, Bloomberg’s initial review of new shipping data showed that overall, fuel tankers carrying refined fuel were seeing rates higher than at any point in the past two-and-a-half decades, with the average day rate now hitting around $40,000–a rate that has been sustained over the past 14 weeks.
Major changes in trade routes have also contributed to rising tanker rates, according to Business Insider, with product being diverted from Western Europe to Asia and Latin America.
Analysts are now predicting even higher tanker rates as the European Union prepares to implement sanctions on Russian oil in December, further disrupting routes and markets.
The recent drop in oil prices has also spurred more shipments, according to Allied. In an interview with Hellenic Shipping News, Allied’s George Lazaridis noted that there are continuing concerns of a reduction in demand and a global economic slowdown, despite the “still relatively tight supply being noted in the market”. However, Lazaridis said that the drop in oil prices spurred increased shipments, which in turn have led to higher freight rates across the tanker segment. It may not last.
“[…]It seems as though this trend has run its course for now, with several major importers showing inflated inventories and softening demand and consumption levels,” he said.
Oil prices have shed some 30% in the past two months on fears of recession, lowering demand outlooks, steady Russian production and a return of Libya’s 1.2-million barrels per day.
