By Tsvetana Paraskova of OilPrice.com

Oil tanker rates have jumped to record highs as escalating risks to shipping in and out of the Middle East are prompting traders and tanker operators to undertake inefficient and more expensive trade routes.

While the crude oil supply is actually there, shipping it through the Strait of Hormuz remains a very risky endeavor, especially in light of the escalating U.S.-Iran tanker war in the Persian Gulf and the Gulf of Oman, while Saudi Arabia has started to move crude cargoes out of the region through the north of the Red Sea and from Egypt’s Mediterranean ports.

The much longer workarounds are tying tankers and supertankers for longer with the shippers, tightening the market of available vessels so much that rates are skyrocketing to all-time highs. 

For example, the benchmark daily rate for a very large crude carrier (VLCC) to ship oil from the Middle East to China has hit a record high of almost $800,000, per data compiled by Bloomberg.

The price of chartering a supertanker to ship crude from the U.S. Gulf Coast to Asia has now hit a lump-sum fee of $29.5 million per run, and that’s not even factoring in fees for additional war risks or unexpected delays. 

“The VLCC positions list is now so tight that no one would be too surprised if we see the WS 400 mark breached for a Fujairah/East run off a prompt-ish position before long, crazy as it may sound,” shipbroker Fearnleys said in its latest weekly report for the week ended September 9.

“The oil still needs to get out through the Strait of Hormuz, and Iranians have increased efforts to stop that from happening. It’s a fragile state of affairs,” the shipbroker added.

“There’s quite a few bottlenecks all at the same time,” Alex Grant, Equinor’s global head of crude, products and liquids trading, told Bloomberg on the sidelines of the APPEC petroleum conference in Singapore.

“The market is quite stressed with all of that, and that’s showing up in the shipping rates.”