Midsize tanker rates to Europe hit record highs

Freight rates to ship crude on an Aframax or Suezmax from the US Gulf coast to Europe have surged to all-time highs as Europe seeks alternative suppliers ahead of the 5 December EU ban on seaborne imports of Russian crude.

The rate for an Aframax on a transatlantic voyage from the US Gulf coast hit $10.18/bl for WTI cargoes on 18 November, a 105pc increase since 10 October. The rate for a Suezmax on the same voyage reached $5.14/bl, up by 96pc in the same time span.

Over that time, the time charter equivalent rate, which represents the daily earnings or loss for a shipowner, for a scrubber-fitted 1mn bl Suezmax has jumped to $100,483/d, a 252pc increase.

The surging rates come as the EU, with a population of 447mn people, shifts its trade patterns ahead of the 5 December ban on Russian seaborne crude, which accounts for about 90pc of Russian exports to the 27-country bloc, according to shipbroker Poten and Partners.

"The rush to get as much crude as possible delivered before the deadline, as well as the need to start sourcing oil from alternative suppliers further afield, have pushed up tanker freight rates across the board," the shipbroker said in its weekly report on 21 November.

Strengthening demand has also raised rates in the very large crude carrier (VLCC) segment: The rate for a 2mn bl cargo on a transatlantic voyage from the US Gulf coast is $3.68/bl, its highest level since April 2020.

With the EU ban looming, the US loaded about 1.58mn b/d of Europe-bound crude in October and 1.8mn b/d so far in November, according to Vortexa. Europe imported a record 1.47mn b/d from the US in the first nine months of the year, according to US Census Bureau data.

The gains in the US crude tanker market are part of global trend that has seen tightening tonnage supply pressure crude freight rates in the Mideast Gulf and west Africa to multi-year highs.

By Tray Swanson