Cost Of Shipping Fuel To Asia Rises 182% Since Yemen Airstrikes

The current turmoil in the Red Sea has caused an 182 per cent surge in oil tanker prices, completely changing the dynamics of global shipping, Bloomberg reported. The revenues of the oil tanker sector are surging to previously unheard-of levels; rates on some routes have increased by the greatest in a single day since 2022. 

The primary cause of this abrupt surge is the rising expense of shipping gasoline barrels from the Middle East to Asia.

Rates for ships carrying gasoline from the Middle East to Asia have almost tripled as of 12 January 2024, rising from about USD 30,000 to USD 83,000 per day. The recent attacks on Yemen's Houthi rebels by the US and UK have resulted in a significant 182 per cent boost in daily revenues. The majority of the impacted vessels are transporting naphtha, an essential component in the production of gasoline and plastics.

Further, the security situation in the Red Sea has prompted several oil product tanker companies to declare their unwillingness to carry cargo through the waterway. Consequently, a growing number of ships are opting to navigate thousands of miles around the African continent as an alternative route. This strategic shift is not only exacerbating the challenges of navigating through the tumultuous waters but is also significantly reducing the number of vessels available in the spot market.

The ripple effect of these developments is felt throughout the global shipping industry, as the increased demand for alternative routes and the decreased availability of vessels continue to reshape the landscape. The implications of this surge in earnings are far-reaching, impacting not only the immediate profitability of oil tanker companies but also the broader dynamics of international trade and commerce.

Additionally, as stakeholders closely monitor the evolving situation in the Red Sea and its repercussions on the oil tanker industry, the resilience and adaptability of shipping companies are being put to the test. The coming weeks will likely witness further adjustments in shipping routes, rates and industry strategies as players navigate through the complexities introduced by the ongoing geopolitical developments.