Amid a recent surge in spot rates, a very large crude carrier (VLCC) has secured a charter contract for a voyage through the Strait of Hormuz at a daily rate exceeding $1 million.
According to shipbroking sources, the “Kuwait Prosperity”—a VLCC built in 2016 and operated by South Korea’s Sinokor Maritime—has fixed a voyage from the Middle East Gulf to Asia. Scheduled for September 22, the fixture was concluded at a Worldscale (WS) rate of 1350, equating to a daily hire rate of over $1 million. Commenting on the rate, a tanker broker remarked, “The market is simply crazy; records are being broken every day.”
Georgios Sakellariou, a freight analyst at shipping consultancy Signal Maritime, stated: “It is clear that the “Kuwait Prosperity” will transit the Strait of Hormuz; however, the question remains whether the vessel will sail directly to East Asia or perform a ship-to-ship (STS) transfer—moving the crude oil to another vessel—after clearing the strait.”
Data from the Baltic Exchange shows that on September 10, the daily charter rate for a VLCC on the round-trip route between the Middle East and China stood at $862,150.
Regarding such exorbitant rates, Richard Matthews, Head of Research and Consultancy at Gibson Shipbrokers, commented: “VLCC freight rates will not remain at such high levels for the long term. The key question is how much longer rates can continue to rise or sustain these highs. This will likely depend on when a contraction in demand truly begins to manifest.”
Another shipbroker, MB Shipbrokers, reported that approximately 4.6 million barrels of crude oil were transported from east to west of the Strait of Hormuz via STS transfers in August—a stark contrast to a year ago, when such operations in the area were virtually non-existent. The firm also noted an increasing number of VLCCs sailing in ballast to the east side of the Strait to await STS transfer opportunities.
MB Shipbrokers stated that STS transfer operations in the Strait of Hormuz have now expanded to include refined petroleum products, with the scope of trade extending beyond the initial UAE operations to encompass Kuwait, Iraq, Qatar, and Saudi Arabia.