Freight rates on the US Gulf coast for medium range (MR) tankers continued to rocket upward today on the near-complete halt of traffic through the strait of Hormuz, with buyers competing to secure alternative supplies of refined products like diesel.
Oil major Chevron and commodity trader ATMI put MR tankers on subjects today for Atlantic basin voyages loading on the US Gulf coast for rates near their highest recorded levels. Chevron's Europe-bound voyage was at Worldscale (WS) 365, or $72.39/t, and ATMI's Caribbean-bound voyage was at $2mn lumpsum, up by 30pc and 67pc, respectively, from 27 February.
This would put the Europe-bound voyage rate only $3.20/t below its highest recorded level on April 2022 and the Caribbean-bound rate only $75,000 below its highest recorded level from the same date, shortly after the war in Ukraine kicked off and threw global oil shipments into chaos.
The halt in traffic in the strait of Hormuz has pushed significant demand toward the US Gulf coast spot market, with refined product shipments "piling up", a market participant told Argus today.
Refiners in the region would likely have struggled to meet the surge in demand in any other year during what is typically the first quarter maintenance season, when many refineries lower output as they service equipment. Refinery utilization typically bottoms out below 80pc before runs pick back up.
But the return of Venezuelan heavy crude to the market at the start of this year has encouraged refiners along the US Gulf coast to keep running instead. Refinery utilization was at 91.1pc on 20 February and only dropped to 89.2pc on 6 February, representing the lowest delta in utilization in the first quarter since 2020, according to US Energy Information Administration data.
