- Shipping costs for US oil going to Europe have hit levels not seen since the start of the pandemic, Bloomberg data shows.
- Daily earnings for mid-size tankers have surged by nearly 12 times this year.
Shipping oil from the US to Europe now costs 12 times more than it did at the start of the year, Bloomberg data shows. Prices haven't been this high in two years — since the early pandemic – to send out a mid-size oil tanker as there are fewer ships available globally.
Earnings per day for Aframax vessels heading from the US Gulf to northern Europe have jumped to $57,000 this week, according to Baltic Exchange data calculated by Bloomberg. These cargoes carry roughly 600,000 barrels of crude, and that price represents a twelve-fold increase from the start of the year.
Prices have soared thanks to Russian crude flows being mostly redirected to Asia in the months since the war in Ukraine began. European buyers have largely turned away from Russia's Urals crude and have struggled to fill in the gaps amid a tight market, although the US has stepped in as a big supplier.
The Aframax vessels are optimally-sized to dock at European docks, which often cannot fit supertankers, an analyst from E.A. Gibson Shipbrokers told Bloomberg, and the current sky-high rates should remain heightened in the months ahead so long as sanctions against Russia remain.
However, the looming potential for a global recession could weigh on oil demand, the analyst noted, which could drag tanker rates back down.
Meanwhile, Russia's oil production is far higher than expected this year, the International Energy Agency said Thursday. Moscow has been able to reroute barrels to buyers that aren't sanctioning the warring nation — like India and China — which has helped it keep output high.
"The market consensus was too pessimistic about Russia's capability to re-route volumes to other buyers," IEA analysts said. "Russia's exports adjusted towards other buyers without a serious disruption to its production."