Oil tanker profits have surged to their highest levels in a single day since 2022, following disruptions in traffic across the Red Sea, which have significantly increased the cost of transporting certain crude shipments.
Shipping rates for vessels carrying fuel from the Middle East to Asia have nearly tripled since the US and the UK launched air strikes against Houthi rebels in Yemen.
The rates leaped to $83,000 per day from around $30,000 – a staggering 182% increase since January 12th.
These vessels primarily transport naphtha, an oil product used in gasoline and plastic manufacturing, and profits for other shipping routes are also on the rise.
The deteriorating security situation in the Red Sea has led many oil product transport companies to declare they will no longer move goods through this waterway.
This decision has forced numerous ships to take thousands of miles detour around Africa, subsequently reducing the number of vessels available in the spot market.
In addition to the significant increase in the shipping cost from the Middle East to Asia, there have been notable changes in other routes as well:
Shipping profits from Europe to the United States reached their highest level since March 2023.
Rates for shipping from the Middle East to East Africa surged to their highest since May last year.
The cost of transporting certain types of fuel from South Korea to Singapore has seen its largest increase since June 2022.
The crisis in the Red Sea is causing significant disruptions in the shipment of various products, ranging from coffee to fruits, and threatens to slow down the recent easing of food price inflation, providing much-needed relief to consumers worldwide.
To avoid attacks by the Houthi rebels in this vital waterway, food-laden ships are now navigating around Africa, leading to longer and costlier routes.
Unlike gas, oil, and consumer goods, the extended shipping duration poses a risk to perishable foods, making them potentially unsalable upon arrival.
