U.S. Crude Exports to Asia Plunge as Tanker Freight Rates Surge

Freight rates to China briefly hit $79.6 million
Oil prices close mixed

An analysis has found that exports of U.S. crude oil to Asia could fall to their lowest level in years as tanker freight rates surge in the wake of the war in Iran.

According to Bloomberg on Oct. 22 (local time), orders placed this month by Asian refiners for U.S. crude oil for November delivery totaled 24 million to 26 million barrels, down about 50% from the previous month.

Bloomberg reported that if orders remain at their current level through the end of this month, Asian refiners' orders for U.S. crude could hit their lowest level in seven years.

The decline in demand in Asia is being driven by freight costs. Tanker freight rates for shipping crude from the U.S. Gulf Coast to China, as measured by the Baltic Exchange, surged to $79.69 million earlier this month before falling to around $60 million. Even so, rates are more than three times higher than before the war in Iran broke out.

Randy Hawkins, head of crude trading at Valero Energy, said on a conference call that shipping crude from the Gulf Coast to Asia costs $30 to $35 per barrel. That is up to seven times higher than last year.

Meanwhile, international oil prices ended sharply higher that day as a Houthi attack on Saudi Arabia heightened military tensions in the Middle East. West Texas Intermediate (WTI) crude for December delivery rose 2.39% from the previous session to settle at $99.47 a barrel on the New York Mercantile Exchange. Brent crude for December delivery jumped 4.00% to settle at $113.17 a barrel on the ICE Futures Exchange.

This content was produced with the assistance of AI translation services.