Supertanker Freight Rates Surge Amid Expanded U.S. Sanctions on Russia’s Oil Industry

Freight rates for supertankers have soared following the latest U.S. sanctions targeting Russia’s oil exports. These measures have driven traders to secure alternative shipping routes and vessels to deliver crude supplies to major buyers such as China and India, industry sources reported.

Key Drivers of Freight Rate Increases

1. Sanctions on Russia’s Oil and Tankers:
   • New U.S. sanctions have intensified restrictions on Russia’s oil sector, including shadow fleet tankers used to transport oil to China and India.
   • An estimated 35% of the shadow fleet involved in Russian, Iranian, and Venezuelan oil shipments are now sanctioned by the U.S., Britain, or the EU, per Lloyd’s List Intelligence.
2. Increased Demand from China and India:
   • Chinese and Indian refiners are aggressively sourcing oil from alternative suppliers in response to the sanctions.
   • Unipec, Sinopec’s trading arm, chartered multiple supertankers and purchased crude cargoes from Europe and Africa, including Norwegian Johan Sverdrup and Angolan Djeno.
3. Tightened Tanker Availability:
   • Many sanctioned tankers are stranded near China’s Shandong province, unable to discharge cargo due to a local ban coinciding with the U.S. sanctions announcement.
   • Analysts warn of further vessel shortages as traders increasingly turn to unsanctioned ships for transporting Russian and Iranian crude.

Freight Rate Trends

• VLCC Rates:
  • Middle East to China: Jumped 39% since Friday to $37,800 per day, the highest level since October.
  • Middle East to Singapore: Increased to WS61.35, up WS11.15 since Friday.
  • West Africa to China: Rose to WS61.44, up WS9.55.
• Aframax Rates:
  • Russia’s Pacific port Kozmino to North China: More than doubled to $3.5 million per voyage.
• U.S. Gulf to China:
  • Increased by $360,000 to $6.82 million per voyage.

Impact on Crude Benchmarks and Regional Premiums

Middle East crude benchmarks have rallied, with premiums for Dubai, Oman, and Murban climbing to levels not seen in over a year, nearing $4 a barrel above Dubai quotes.

Outlook

The expanded sanctions on Russia’s oil sector are expected to further strain the global tanker market, with demand for unsanctioned vessels likely to remain elevated. This dynamic could sustain higher freight rates in the coming weeks, particularly on key routes connecting the Middle East, West Africa, and the U.S. Gulf to Asia. Additionally, China’s and India’s shift to alternative crude supplies may lead to longer shipping routes and increased costs, adding further pressure on the global oil market.