Oil Freight Rates Jump in Mideast as Iran Conflict Fans Risk
Key rates for supertankers voyaging from the Middle East to East Asia rose almost 60% in less than a week, according to shipbrokers and charterers, as exporters who had been trying to book ships were met with few offers. They asked not to be identified as they're not authorized to speak publicly.
Meanwhile, some owners with tankers that had been provisionally chartered as of Friday, pending confirmation of the booking, chose not to extend the agreements into the weekend, one of them said.
The global oil market has been transfixed by the conflict in the Middle East, with Israeli strikes on Iranian energy and nuclear infrastructure roiling prices. While the likelihood of significant supply disruptions may be remote at this stage, the stability of shipping in and around the Middle East will be closely watched. The region is home to about a third of the world's production, and major exporters such as Saudi Arabia have limited scope to divert exports if needed.
As hostilities have intensified, tanker owners are monitoring conditions for navigation through the Strait of Hormuz, the vital waterway that links the Persian Gulf to the Indian Ocean. Though ship diversions haven't yet been spotted, owners are holding back on fixing new voyages in the Gulf, setting the stage for higher freight rates and the possibility of disruptions.
The benchmark rate for a supertanker capable of hauling 2 million barrels of crude from the Middle East to China — the TD3C route — jumped to 70 to 71 Worldscale points on Monday, up from about 44 last Thursday, before Israel struck Iran, according to shipbrokers. Worldscale points are a percentage of an underlying flat rate, which is set for each major route at the start of the year.
On a per-day basis, chartering costs were near $46,000 on Monday, according to data from the Baltic Exchange. That's up by more than $12,000 from the prior session, the biggest gain since February last year.
Forward-freight agreements — a derivative that allows buyers to lock in future rates — have increased as an indication of caution across the sector. FFAs for the TD3C route rose to around $14.50 a ton at one point on Monday, compared with about $11 before Israel's attacks on Iran.
--With assistance from Alex Longley and John Deane.
(Updates throughout with latest rates.)
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
an hour ago
- Time of India
Ambani's Reliance in focus as EU warns refiners using Russia oil
The oil-procurement patterns of India's Reliance Industries Ltd. are coming under scrutiny after the European Union announced new restrictions on diesel made from Russian crude. Reliance bought Abu Dhabi's Murban crude in a rare purchase late last week, traders said, adding that it picked up the cargo soon after Friday's sanction package. The private refiner isn't a regular buyer of the UAE grade, a premium crude that tends to be costlier than its regular appetite of Russian Urals and heavier Middle Eastern varieties. Explore courses from Top Institutes in Please select course: Select a Course Category MBA Leadership Others PGDM Finance others Healthcare CXO Operations Management Public Policy Artificial Intelligence healthcare Data Analytics Degree Project Management Digital Marketing Data Science Management Technology MCA Product Management Design Thinking Data Science Cybersecurity Skills you'll gain: Financial Management Team Leadership & Collaboration Financial Reporting & Analysis Advocacy Strategies for Leadership Duration: 18 Months UMass Global Master of Business Administration (MBA) Starts on May 13, 2024 Get Details Skills you'll gain: Analytical Skills Financial Literacy Leadership and Management Skills Strategic Thinking Duration: 24 Months Vellore Institute of Technology VIT Online MBA Starts on Aug 14, 2024 Get Details Separately, people familiar with Reliance's import plans said the company has begun seeking to diversify its crude purchases away from Russia, its single-biggest source of oil so far this year. The people asked not to be identified as they aren't authorized to speak publicly. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like No annual fees for life UnionBank Credit Card Apply Now Undo A company spokesman wasn't immediately available to comment on the matter when contacted during regular working hours. Reliance, a mega refiner owned by billionaire Mukesh Ambani, and other Indian processors have been among the world's top beneficiaries of Moscow's war in Ukraine. Europe shunned Russian crudes soon after the 2022 invasion, leading to deep cargo discounts that enticed Indian refiners to crank up opportunistic buying for production of fuels such as diesel, which it resold to western customers. Live Events According to ship-tracking data compiled by Kpler, Russia has supplied almost half of Reliance's crude imports so far this year. In turn, around one-fifth of the processor's total product exports were sold to Europe. The process of refining Russian crude into diesel for sales into Europe has put Reliance in the line of fire of EU's latest pressure on Moscow, with the ban set to take effect Jan. 21 next year. While it's too early to tell if Reliance will pivot dramatically away from Russia, traders say there are some initial signs of the company seeking alternatives from places such as the Middle East. Still, it's unclear how the mega refiner will source close to 600,000 barrels a day of crude from other producers, and at what cost, they added. So far, the South Asian nation has been critical of latest EU sanctions, with India's Foreign Secretary Vikram Misri on Tuesday saying that there was a need for 'balance' when secondary sanctions are imposed on the purchase of Russian oil and gas.
&w=3840&q=100)
First Post
an hour ago
- First Post
Trump on Asia deal spree, Taiwan aims to seal trade pact in new round of talks as deadline nears
Negotiators from the island-nation reached the US on Wednesday for tariff talks, as the delegation hopes to clinch a deal with US counterparts. The fourth round of talks is being attended by Vice Premier Cheng Li-chiun and trade negotiator Yang Jen-ni read more As US President Donald Trump secured trade deals with two Asian countries back-to-back, Taiwan is hurrying to get in line and seal its own agreement with Washington as the August 1 deadline nears. Negotiators from the island-nation reached the US on Wednesday for tariff talks, as the delegation hopes to clinch a deal with US counterparts, a source has told Bloomberg. The fourth round of talks is being attended by Vice Premier Cheng Li-chiun and trade negotiator Yang Jen-ni. STORY CONTINUES BELOW THIS AD The source said that discussions between the two sides have been 'constructive' so far, adding that the final tariff rate will ultimately be decided by Trump. The Taiwanese delegation's visit comes as the country's neighbours successfully reached trade deals with the US as announced by the president. Japan and Philippines seal the deal Trump announced Tuesday a 'massive' trade deal with Japan. He said that under the deal, 'Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90 per cent of the Profits'. Japanese Prime Minister Shigeru Ishiba said that the autos levy had been cut to 15 per cent, sending Japanese car stocks soaring, with Toyota and Mitsubishi up around 14 percent each. The Nikkei rose 3.5 percent. Trump agreed Tuesday to reduce threatened tariffs on the Philippines, but only by one percentage point, after what he termed a successful meeting with his counterpart Ferdinand Marcos. The Japan agreement, along with another pact with the Philippines also announced on Tuesday, means Trump has now secured five agreements since his administration promised in April '90 deals in 90 days.' US-Taiwan trade Taiwan's increasing dependence on the US market has heightened its urgency to reduce tariffs. Last year, Taiwan recorded a trade surplus of around $65 billion with the US, driven by strong demand for tech products essential to the AI boom. In April, Trump imposed a 32 per cent tariff on Taiwanese goods before pausing it. This gave Taipei the time to hammer out a deal with the US. STORY CONTINUES BELOW THIS AD Taipei had also committed to increasing investment in the US and tightening export control loopholes on high-tech products, an area of concern for Washington as it seeks to limit China's technological advances amid fears that Beijing could gain a military advantage. With inputs from agencies
Mint
an hour ago
- Mint
HK Builder Lai Sun Seeks More Bank Support for Loan Refinancing
(Bloomberg) -- Hong Kong developer Lai Sun Development Co. has been working to win banks' backing for a HK$3.5 billion ($446 million) loan refinancing deal, but after about six months of talks, nearly half the lenders still aren't on board, according to people familiar with the matter. The property firm — controlled by local tycoon Peter Lam — has secured commitments from nine out of the original 19 lenders for the five-year refinancing, said the people, who declined to be identified discussing private matters. The existing loan matures on Oct. 5, according to Bloomberg-compiled data, adding urgency to Lai Sun's efforts. Even if Lai Sun doesn't manage to secure the target amount from all banks, it could still opt to partially repay the loan and refinance the rest, the people said. Lai Sun's financing challenges underscore the depth of Hong Kong's years-long property downturn, which has made banks cautious about lending to developers in the city. The company has already spent longer on its deal than property giant New World Development Co. took to complete its recent record loan refinancing, a process that only materialized after months of negotiations and meetings between banks and regulators. Lai Sun's original loan was backed by its Cheung Sha Wan Plaza office tower and shopping center in Hong Kong's Kowloon district, and the refinancing would be too. The company has proposed an all-in pricing of about 160 basis points over the Hong Kong InterBank Offered Rate for the refinancing, the people said. The cash flow generated from Cheung Sha Wan Plaza would be sufficient to cover interest expenses on the existing borrowing, according to the people. Lai Sun said in its interim results that the tower had an occupancy rate of 92.1%, generating HK$131 million in rental income for the six months to Jan. 31, down from HK$143 million a year earlier. Lai Sun Development is the property arm of Hong Kong conglomerate Lai Sun Group, which is also known for its media and entertainment businesses. The parent's financial position has been under the spotlight since last year, when it shut some of its restaurants in Hong Kong, including Michelin-starred ZEST by Konishi. The real estate unit reported a net loss of about HK$117.8 million for the six months ended January, narrowing from the year-earlier period. Property sales fell 33.2% to HK$617.2 million. Separately, Lai Sun is also in talks to refinance another bank loan backed by some of the company's onshore assets, including Hong Kong Plaza in Shanghai, other people said. The HK$3.97 billion loan is due to mature in early 2026, they added. Lai Sun didn't immediately respond to a request for comment. Lai Sun had HK$34 billion of total liabilities as of Jan. 31, according to its latest interim report. Its 5% dollar note with $493 million outstanding is trading at about 52 cents, according to data compiled by Bloomberg, a distressed level reflecting investor concerns. More stories like this are available on
