Key VLCC rates across west Africa, the US Gulf, the Gulf of Oman, Yanbu and the Mideast Gulf have rallied again and extended historic highs this week across key markets.
The bellwether Mideast Gulf to China route broke the four-digit threshold for the first time since Argus records began, before rising further to WS1100 ($241.45/t) on 15 September.
Rates have jumped as a result of escalations in the US-Iran conflict, with Saudi Aramco shutting down its 7mn b/d East-West crude pipeline following drone attacks originating in Iraq, Riyadh said. This led to disruptions in loadings from the port of Yanbu according to market participants.
It also led to fewer owners being willing to transit the area. Vessel transits through the strait of Hormuz fell to eight crossings on 14 September, according to data from maritime security firm Windward.
Of those eight vessels, five were inbound crossings on the northern Iranian-controlled corridor and one on the US-assisted southern lane, along the coast of Oman, according to data from Windward. The two remaining trips were outbound, evenly split between the northern and southern lanes.
Escalations in the Red Sea also led to increased additional war-risk premium (AWRP) levels following the Houthis' capture of Yemen's Red Sea port of Mocha. Some market participants said that certain insurers are no longer providing cover for Bab el-Mandeb transits. This also contributed to higher rates from Yanbu as owners priced the increase into their offers.
This pushed crude demand to the Atlantic and the Gulf of Oman where markets remain more liquid and functional. Crude exports from the Gulf of Oman have almost doubled so far in September, with just under 10pc of total exports being on Suezmaxes, with VLCCs carrying the vast majority.
In the US Gulf market, a charterer put a VLCC on subjects for a US Gulf coast-China voyage at $43.25mn lump sum, including $250,000 load-port fees, raising the rate on that route by $4.5mn to that level, also its highest recorded by Argus.
