Freight rates for supertankers surged as U.S. sanctions on Russian oil forced traders to secure alternative shipping options for crude deliveries to China and India, industry sources reported.
Chinese and Indian refiners are now scrambling to replace Russian oil amid new restrictions aimed at curbing Moscow’s energy revenues. Many affected tankers belong to a "shadow fleet" that previously transported Russian crude to Asia at discounted rates. Some of these vessels also carried Iranian oil, which remains under sanctions.
The cost of chartering Very Large Crude Carriers (VLCCs), capable of carrying 2 million barrels, spiked after Unipec, the trading arm of Sinopec, booked multiple supertankers on Friday. The TD3C route (Middle East to China) saw rates jump 39% to $37,800 per day, the highest since October.
Sanctions have also driven up freight costs for Russian oil. Aframax tanker rates for ESPO blend crude from Kozmino (Russia’s Pacific port) to North China more than doubled to $3.5 million, as shipowners demanded significant premiums due to vessel shortages.
Adding to market tightness, sanctioned tankers remain stranded outside Shandong province, following a local port ban on their discharge. Analysts predict a further squeeze as traders hunt for non-sanctioned vessels to transport Russian and Iranian crude.
The cost of shipping crude from the Middle East to Singapore climbed WS11.15 to WS61.35. On the Middle East to China route, freight rose WS10.40 to WS59.70, while rates for VLCCs carrying West African oil to China increased WS9.55 to WS61.44. Meanwhile, the cost to transport crude from the U.S. Gulf to China hit $6.82 million, up $360,000 since last week.
As demand for compliant tankers grows, more vessels may be drawn into the shadow fleet, further tightening the global shipping market. Industry experts anticipate continued volatility in freight rates as traders adjust to the evolving sanctions landscape.
