Oil tanker costs exceed $1.2 million per day for the first time

The cost of chartering a super tanker exceeded $1.2 million per day for the first time on shipping routes between the Middle East and Asia, amid disruptions to cargo flows caused by the war in Iran and a shortage of large tankers. This marks a sharp increase from the period last year, when daily charter rates for super tankers typically ranged between $20,000 and $50,000, according to data cited by the Financial Times.

Oil shipping costs between the Middle East and China have doubled since late August for super tankers with a capacity of around two million barrels, according to shipping broker Primar. Additionally, the cost of shipping oil from Brazil to China rose by about a third last week.

Rising transport costs have led some refineries to cut production as profit margins shrink, despite refined fuel prices reaching record highs. Alternative routes to secure crude oil take approximately 30 to 40 days, according to Martin Rats, an analyst at Morgan Stanley.

Rats noted that transshipment operations—transferring cargo from one vessel to another—are time-consuming, and a super tanker may remain idle for up to 10 days waiting for a cargo. War risk insurance premiums have also surged, reaching around 10 percent of the vessel’s hull value in some cases, compared to roughly 3 percent or less in less active conflict zones.