Asia — Rising crude transportation costs are prompting refiners across Asia to reconsider purchases of U.S. oil, as record tanker rates make shipments from the Gulf of Mexico significantly more expensive and weaken the commercial appeal of the trade.
Traders and shipbrokers cited by Reuters said chartering a very large crude carrier to move 2 million barrels of U.S. crude from the Gulf of Mexico to China in November cost $80 million during the week.
The figure came from data provided by shipbrokers Simpson, Spence & Young on LSEG. At these rates, market participants no longer considered the route economically viable, effectively eliminating the arbitrage opportunity that had previously supported shipments.
In response, Asian refiners are evaluating alternative crude sources, including supplies from the Middle East and Latin America. Murban crude from the United Arab Emirates has emerged as one option attracting interest.
Murban’s premium climbed back above $11 per barrel against Dubai quotes on Thursday, signaling a shift in demand as buyers reassessed their purchasing choices.
The situation demonstrates how transportation expenses can reshape international energy markets even when crude oil remains available. Beyond the price of the commodity itself, refiners must account for freight charges, insurance, shipping risks and the availability of suitable vessels when determining whether a purchase is commercially worthwhile.
Buying from suppliers located closer to their refineries can help Asian customers reduce transportation expenses. However, decisions also depend on the properties of different crude grades, individual refinery requirements and the dependability of available supply routes.
Global oil shipments have also faced complications from disruptions to maritime traffic through the Strait of Hormuz. Some cargoes have been diverted, while ship-to-ship transfers and shifting export patterns across the Atlantic Basin have added to logistical challenges.
The sharp rise in freight rates has been especially consequential because it has changed the cost calculations for transporting U.S. crude to Asian markets. Even with American supplies available, higher shipping expenses can make competing grades more appealing to buyers.
Traders and shipbrokers reported that freight prices had increased by more than 300% since mid-August. The surge has placed additional pressure on refiners seeking to secure crude without allowing transportation costs to eat into processing margins.
Trading companies such as Trafigura and Vitol have investigated using smaller Aframax tankers as a way to lower shipping expenses. However, these measures have achieved limited success in countering the broader increase in freight costs.
The reliability of supplies remains an important factor. Despite expensive transportation, some Asian refiners may still have to buy U.S. crude if alternative sources become unreliable or geopolitical developments put major shipping routes at risk.
The changing purchasing patterns underscore the growing influence of shipping economics on global crude flows. Refiners must weigh oil prices against transportation costs and supply reliability as they navigate increasingly complex international trading conditions.
Original article
Comments