44.8 million dollars per boat! The cost of shipping U.S. crude oil to Asia reached a record high

The Zhitong Finance App learned that as supply disruptions in the Middle East intensify, buyers are anxious to lock in energy supplies, and the cost of transporting US crude oil to Asia has soared to a new record.

According to data from the Baltic Sea Exchange, as of Tuesday, renting a very large crude oil carrier (VLCC) to transport 2 million barrels of crude oil from the US Gulf Coast to China at a cost of about US$44.8 million, the highest level in history, a sharp jump from the previous day's US$39 million. Before war broke out in Iran at the end of February, this cost was only about 17.8 million US dollars.

At a time when there is a supply gap affected by the war, U.S. crude oil continues to support market supply. This week, Saudi Arabia shut down the east-west oil pipeline — the main channel for the country to circumvent the turbulence in the Strait of Hormuz caused by the war in Iran. This situation has made US supply more critical, while record shipping costs have barely stopped Asian buyers, and the conflict is reshaping the global energy flow pattern.

Despite this, this trans-ocean trade is still viable because the US benchmark crude oil West Texas Intermediate (WTI) delivered to Asia is still cheaper than competitive sources such as the UAE's Murban crude oil. As long as this price advantage persists, buyers are likely to continue to incur higher-than-normal shipping costs.

As shipping costs along the Gulf Coast soar, global tanker freight rates are also rising, and there is little sign that this trend will change. Many ships are unwilling to go through routes where there is a risk of being attacked, and the supply of capacity in the Strait of Hormuz is shrinking. Meanwhile, strong fuel demand means refiners will continue to buy and transport whatever crude oil they can get, as it is still profitable to process this oil into refined products such as diesel and gasoline.

Research firm Kpler's data shows that six VLCCs plan to load crude oil from the US Gulf Coast to Asia in October.