The escalation of the conflict between Israel and Iran has forced some oil tanker owners to suspend routes through the Middle East, raising concerns about the stability of global supplies. Due to increased risks, freight rates have already jumped by 20-30%, and traders are warning of possible disruptions to shipping through the Strait of Hormuz - a key artery of the world oil market. This is reported by Bloomberg UNN.
Details
Some oil tanker owners and managers have "suspended offering their vessels for Middle Eastern routes since Friday, assessing the risks associated with the conflict between Israel and Iran," the publication notes.
Producers and traders trying to book vessels to load crude oil and fuel from the Persian Gulf have received few offers
Meanwhile, "some tanker owners who were pre-chartered as of Friday, pending confirmation of booking, decided not to continue the deals over the weekend," one of them said.
Although the likelihood of significant or prolonged supply disruptions at this stage may be low, the stability of shipping in and around the Middle East will be closely monitored in the global oil market in the coming weeks, the publication said.
The region accounts for about a third of global production, and major exporters such as Saudi Arabia and the United Arab Emirates have few options to redirect exports if shipping from the Persian Gulf is affected.
Amid escalating hostilities, including Israeli strikes on Iranian energy and nuclear facilities, oil tanker owners, according to the publication, have stepped up security controls on shipping through the strategic Strait of Hormuz. Despite the fact that no mass rerouting has been recorded yet, many shipowners are refraining from planning new voyages to the Persian Gulf. This is already creating conditions for rising freight rates and the risk of supply disruptions, the publication emphasizes.
According to traders and marine brokers, "on Friday, the cost of transportation on the key TD3C route connecting the Middle East to China rose to 55-58 Worldscale points - 20-30% more than at the beginning of the week."
Although the final prices for Monday have not yet been published due to a lack of active transactions, preliminary indicative data indicate an increase in the index to about 65 points.
Addition
Worldscale indices are a percentage of the base freight rate, which is set annually for major routes. At the same time, prices for derivatives - freight forwarding agreements (FFAs) - are also rising, allowing rates to be fixed in advance. On Monday, the price of transportation on the TD3C route rose to almost $14 per tonne, compared to about $11 before Israel's airstrikes on Iran.