Launceston (Australia) - Asian refiners are once again paying the price for the ongoing battle between the United States and Iran, with the effective price of crude oil being kicked higher by a sharp rise in tanker freight costs.
And the bad news for refiners is that the rise in the price of delivered crude may be more sticky than previous spikes caused by factors that proved temporary, such as the strikes on Saudi Arabia’s oil installations and attacks on tankers in the Middle East.
Freight rates for shipping crude have surged since the administration of U.S. President Donald Trump slapped sanctions on Chinese tanker companies for carrying Iranian crude in violation of sanctions against Tehran. Some routes have seen charges surge to record highs, adding several more dollars per barrel to the delivered cost of crude oil. Given Asian refiners rely heavily on long-distance supplies from the Middle East, Africa and the United States, the rise in freight costs will hit them disproportionately.
For example, South Korea’s top refiner SK Energy chartered a supertanker, Maxim, to ship U.S. crude to South Korea in November for $10 million, the highest price for a U.S. Gulf-to-Asia shipment ever, Reuters reported on Oct. 2, citing two sources familiar with the matter.