The cost of shipping oil in the largest tankers hit record highs this week following the biggest wave of attacks on shipping since the U.S.-Iran war began in late February.
The shipping rate for supertankers – also called very large crude carriers or VLCCs – loading oil from the Gulf of Oman for shipment to China reached around 450 on a Worldscale basis, equaling roughly $11.50 per barrel, according to Baltic Exchange data. This is the highest since the rate was launched earlier this year, after the start of the U.S.-Israeli war with Iran.
The spike in rates shows how the Middle East conflict is feeding into the broader economy. If elevated shipping costs persist, they could add to inflationary pressures and further raise costs for businesses and consumers already facing uncertainty from the widening conflict.
Iran said on Wednesday it had attacked 10 ships near the Strait of Hormuz after the U.S. sank five Iranian oil tankers.
Yemen’s Iran-aligned Houthis on Friday reached the strategic island of Perim in the Bab el-Mandeb Strait, four Yemeni government sources told Reuters, potentially tightening their grip on one of the world’s vital shipping routes.
“Renewed attacks between the U.S. Navy and Iran continue to push freight rates around the Gulf to new highs,” said Vortexa analyst Ioannis Papadimitriou.
The higher risk of operating in and around the Middle East Gulf is also driving Gulf of Oman freight rates higher, in fear of Iranian retaliation, which naturally thins the available tankers in the region, Papadimitrou added.
The recent military escalation in the region is also having a wider knock-on effect, as VLCC rates on the West Africa to Asia route also reached record highs.
(Reporting by Enes Tunagur in London, editing by Alex Lawler and Susan Fenton)