Freight For Tankers Carrying Crude Oil From Gulf Increased
Oil tankers are increasing crude oil transportation freight from the Middle East as Iran rises risks in the Gulf after retaliating the killing of a top US general.
According to brokers and oil traders in Asia, ship owners are demanding higher prices for supertankers carrying crude oil from the Persian Gulf to China. Since the region is risky and there are not enough tankers to meet the supply, they intend to evaluate this privilege.
The cost increase in this important region shows how the growing conflict between the US and Iran has spread to global oil supply chains. Last year, freight markets were shaken by sanctions on a Chinese shipowner carrying Iranian oil and sabotaging tankers near the Strait of Hormuz.
In addition, the freight rates have increased due to the new shipping rules that obliged the use of low sulfur fuel, which is known to come into effect by the beginning of 2020.
The expectation for increased freight may inevitably be reflected in other important routes such as the Middle East, India, the USA and Europe. Rental fees are usually negotiated and fixed using world-class points, which are a percentage of the basic rates fixed for the year. Most of the costs are still taken into consideration according to the 2019 rates, which causes the parties to account errors, causing the shipowners to struggle with increasing fuel costs.
Even if the refineries in Asia, South Korea, Japan and India, which are the world’s largest oil import region to produce fuels that comply with the new shipping rules, try to update and diversify themselves, they are still heavily dependent on the Middle East because of their raw materials. The three largest producers of OPEC, Saudi Arabia, Iraq and the USA, produced more than 17 million barrels a day last month and supplied oil to local refineries and processors around the world.