Occidental Pays Record Rate To Ship Oil As Supertanker Rates Soar

Occidental Petroleum has chartered the Very Large Crude Carrier Maran Andromeda to carry oil to South Korea for a record-setting price of $13.25 million, Reuters sources said on Monday.

The crude oil is set to leave the United States on November 20.

Freight rates to Asia have climbed to new heights after the United States sanctioned several Chinese tanker owners for “knowingly engaging in a significant transaction for the transport of oil from Iran, including knowledge of sanctionable conduct, contrary to US sanctions.” The sanctions extended to two units of Cosco, which owns 7.5 percent of the global supertanker fleet.

Now, US shippers—and elsewhere around the globe—are scrambling to find unsanctioned carriers for its crude oil, raising the price for chartering VLCCs. Last week, the cost of shipping from Middle East to north Asia rose 19% the day after the sanctions were imposed. Other routes such as the Middle East to India’s west coast route increased 28% on that first day following the sanctions. But it has gone from bad to worse.

Persian Gulf to Asia shipping rates today saw their biggest one-day increase so far this year, with S&P Global Platts assessing that benchmark VLCC rate 20 points higher to Worldscale 120, or $22.58/mt—the highest price is 11 years.

The global VLCC supply has since been curbed by 5%.

Some shippers are waiting for prices to come back down before booking transit, but Occidental is tentatively booking for Nov 20.

Occidental is the largest Permian oil exporter from the US Gulf Coast, exporting a total 300,000b arrels per day, or 10% of all US crude oil exports. It has plans to double its crude exports next year, Reuters said in March, although higher freight rates could dampen those prospects.

Source: Oilprice.com