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Since Friday, some oil tankers and managers have paused offering their ships for Middle Eastern routes as they consider the risk from Israel’s conflict with Iran, according to Bloomberg. These actions are fueling concerns over oil export flows from the region.
Producers and traders attempting to book vessels to load crude oil and fuel from the Persian Gulf have received few offers, according to anonymous shipbrokers and charterers cited by Bloomberg. Meanwhile, several owners with tankers that had been provisionally chartered as of Friday — pending final confirmation — declined to extend those agreements into the weekend, one of them shared.
Although no significant disruptions have occurred so far, the stability of shipping in and around the Middle East will be closely observed by the global oil market in the coming weeks. The region accounts for roughly one-third of global oil production.
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As hostilities intensified, tanker owners are closely monitoring the navigational risks through the Strait of Hormuz into the Persian Gulf. Their hesitation to fix new voyages in the Gulf raises the potential for increased freight rates and future disruptions to shipping.
According to Bloomberg, traders and shipbrokers reported that rates for the benchmark TD3C route — used by supertankers traveling from the Middle East to China — rose to around 55 to 58 Worldscale points on Friday, an increase of roughly 20% to 30% from earlier in the week.
Due to limited open market discussions, firm price estimates were unavailable on Monday. However, Bloomberg’s sources said indicative levels suggested the rate had risen to about 65 points.
Worldscale points represent a percentage of an underlying flat rate, which is set annually for each major route.
Forward freight agreements (FFAs) — a derivative used by buyers to lock in future rates — also increased, signaling rising caution within the sector.
FFAs for the TD3C route grew to nearly $14 per ton on Monday, compared with about $11 before Israel’s strikes on Iran, Bloomberg reported.
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