Daily freight rates for very large crude carriers, or VLCCs, have climbed to a record $1.27 million. Reuters reported that the market came under fresh pressure after ship-to-ship crude transfer capacity off the coast of Oman effectively reached its limit.
The squeeze follows a shift in Saudi Arabia’s export logistics. After Houthi attacks, the kingdom diverted part of its flows away from the port of Yanbu and sold about 60 million barrels of crude that are set to be shipped this month and in October from the Gulf of Oman after being transferred from smaller tankers to supertankers.
Under that route, crude is first loaded at a port on the Persian Gulf coast, moved through the Strait of Hormuz, and then transferred to a larger tanker in the relatively safer Gulf of Oman. Kpler data show that average daily volumes on this route reached 3.6 million barrels in September, up from just 900,000 barrels a day in August, before the Houthis attacked the East-West pipeline.
Kpler analyst Panagiotis Krontiras told Reuters that handling this extra volume requires another 36 to 40 VLCCs. Oil Brokerage’s head of global shipping research, Anoop Singh, said the 2 million bpd increase in Saudi flows alone creates demand for 15 additional VLCCs for shuttle runs. In his estimate, the same amount of oil that needed 24 VLCCs in August now requires 40 in September because of the ship-to-ship transfers.
The supply picture is made even tighter by another 20 tankers waiting in the Red Sea for the port of Yanbu to resume operations. With vessel availability so constrained, daily VLCC freight rates rose to an all-time high of $1.27 million on Monday, according to LSEG data cited by Reuters.
The development underlines how quickly regional security disruptions can feed into global energy logistics, driving up transport costs and adding further strain to the oil market.
