Brent Holds Above $100 as Hormuz Traffic Slumps and Supertanker Rates Hit Record

Brent crude was trading at $102.83 a barrel and West Texas Intermediate at $90.33 late in the Oct. 9 session, both lower on the day but higher than where they opened the week, as renewed attacks on shipping kept a risk premium embedded in the benchmarks. Kpler reported that the number of tankers transiting the Strait of Hormuz had dropped to the lowest in two months, with only seven commodity carriers counted crossing the waterway on Tuesday. Crude volumes moving through the strait fell 27% from the wartime high set the previous week to at least 10.1 million barrels a day, the lowest since late July.

The physical side of the market is now where the stress is most visible. Assessed supertanker rates for the roughly three-week Persian Gulf to East Asia voyage reached an all-time high of nearly $1.4 million per day on Wednesday, a surge of almost 540% compared with before the conflict, against a roughly 40% rise in Brent over the same period. More than 40% of the global fleet of about 850 very large crude carriers is now either inside the Persian Gulf or within a couple of days' sailing of it, according to Signal Ocean, which described recent months as the best of all time for crude tankers.

That concentration is draining tonnage from every other route. The number of empty VLCCs heading to Atlantic basin ports has halved from a month ago, and at least one VLCC was offered this week to sail from the US Gulf to Japan at a potential record fee of $82 million, or more than $40 a barrel, a gain of over 50% on the route in just three weeks. Charterers are substituting smaller Suezmax and Aframax hulls on non-Middle Eastern routes, lifting those rates in turn, while the US added 17 more tankers carrying Iranian crude, fuels and petrochemicals to its sanctions list. Between Sept. 28 and Oct. 2 there were at least 12 attacks on tankers carrying crude, LPG and LNG, according to a US Navy-led joint information centre.