Middle East conflict slows tanker bookings, lifts rates
The global benchmark rate for a very large crude carrier (VLCC) moving oil from the Middle East Gulf (MEG) to Japan, known as TD3, rose over 20% on Friday after the tensions broke out, according to LSEG data.
On Monday, the MEG-Japan rate for crude held steady at about W55 on the Worldscale industry measure, according to a shipbroker.
However, further gains in freight rates were limited as traders, shipbrokers and charterers take a wait-and-watch stance even as market participants said they did not expect the Strait of Hormuz, a key shipping passage, to be shut.
"Fixing on Friday from the region all but came to a standstill. Physical marks may therefore not be indicative. Ships inside the gulf are still looking for outbound charters," said Anoop Singh, global head of shipping research at Oil Brokerage.
"But the situation remains dynamic, and we expect to hear more on market open today," said Singh.
"We have noted a minor increase in freight rates so far, but expect them to rise further as the week progresses," according to Sentosa Shipbrokers.
Emril Jamil, senior analyst for crude and fuel oil at LSEG Oil Research, said freight rates will depend on any continued escalation and potential action by Iran on the Strait of Hormuz. About 18 million to 19 million barrels per day of oil and oil products flow through the waterway, which connects the Gulf to the Gulf of Oman.
"The war risk premium is expected to remain high in the near-term given the continued exchange of tensions between the two countries. This will exponentially rise if other Middle East oil and gas infrastructure are attacked," said Jamil.
He added that cargo insurance premiums could range from an additional $3 to $8 a barrel if there are further attacks.
For clean products, freight rates to ship around 90,000 tons of either gasoline, diesel or jet fuel from the Middle East to markets west of the Suez Canal were at $3.3 million to $3.5 million late last week, before the conflict, according to estimates from three shipping sources, but new offer levels have yet to emerge.
Some brokers are already giving market indications at $4.5 million levels, according to one Singapore-based trade source.
Several shipowners are holding back offering vessels for routes in the Gulf until the situation becomes more clear, which may increase opportunities for voyages from the Far East to the west of Suez and from northwest India, Sentosa shipbrokers said in a note to clients.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
8 minutes ago
- Reuters
China's Sinopec Shanghai Petrochemical first half profit slides
Aug 20 (Reuters) - China's Sinopec Shanghai Petrochemical Co ( opens new tab swung to a net loss in the first half of 2025 as weaker demand hit sales of refining and chemical products, the company reported late Wednesday. Sinopec reported a net loss of 462.1 million yuan ($64.40 million) for the period from January to June, according to the report. That compares with 27.9 million yuan profit the prior year. Net sales were 33.498 billion yuan, down 10.66% year-on-year, with net sales of refining products and chemicals falling 16.14% and 3.21%, respectively. The company said the market remains challenging, with strong supply and weak demand, rising penetration of new-energy vehicles squeezing fuel demand, and the chemical sector still at a cyclical low. Weaker market demand drove a 6.72% decline in refining product sales volumes. With crude prices falling, weighted average selling prices across all segments also declined from a year earlier, the company said. Refinery throughput was 6.33 million metric tons in the six-month period, down 4.93% year-on-year. Diesel production fell 13.56% and aviation fuel declined 8.62% year-on-year, while gasoline slightly rose 0.14%. Output of ethylene, a key building block for petrochemicals, rose 24.34% to 273,300 tons in the first half. Capital expenditure was 408 million yuan in the first half of 2025, mainly allocated to construction work for the Shanghai Petrochemical cogeneration unit clean-efficiency upgrade. Sinopec Shanghai Petrochemical's Shanghai-listed shares closed at 2.90 yuan on Wednesday, up 1.75% on the day. The stock is down 4.3% year-to-date, while the SSE Composite Index has risen 12.37% over the same period. ($1 = 7.1757 Chinese yuan renminbi)
Reuters
8 minutes ago
- Reuters
India rate panel says US tariffs key drag on growth, flags benign inflation outlook
MUMBAI, Aug 20 (Reuters) - India's monetary policy committee members flagged evolving risks from global trade tensions and tariffs as a key drag on growth but said the economy remains resilient with the inflation outlook benign, minutes of the August meeting showed on Wednesday. The Reserve Bank of India held its key repo rate steady at 5.50% earlier this month, after cutting rates by 100 basis points so far in 2025. The six-member Monetary Policy Committee voted unanimously to retain a "neutral" stance, citing the need for flexibility amid domestic and global uncertainties. "Growth projected at 6.5% is resilient," RBI Governor Sanjay Malhotra wrote in the minutes, but added the projection was "certainly lower than what we can achieve." He warned that uncertainty in external demand, driven by tariffs and geopolitical tensions, remained a major drag on growth. India faces as much as 50% tariff on exports to the United States starting August 27 after U.S. President Donald Trump imposed an additional 25% tariff earlier in the month citing New Delhi's continued imports of Russian oil. Malhotra said the moderation in food inflation since the June meeting was larger than expected, but cautioned that the uncertainties around tariffs were still evolving. He added that the neutral stance would provide the necessary flexibility to respond to changing conditions. India's retail inflation rate dropped to its lowest level in eight years in July, as falling food prices, especially vegetables and pulses, squeezed farmers' incomes. Deputy Governor Poonam Gupta said the moderation in inflation was not broad-based and was primarily driven by food prices falling. "Core inflation is likely to remain above 4% in the near to medium term, barring any major negative shock to input prices," she wrote. MPC member Ram Singh said the average CPI inflation outlook for 2025–26 had become "very benign," though core inflation was expected to stay above the target range. He flagged sustained growth in construction, trade and services, but warned of high uncertainty on both inflation and growth fronts. External member Nagesh Kumar said the case for stimulating private investments and urban demand remains strong while the benign inflation outlook also provides policy space. But considering trade policy uncertainties, it is better to wait and watch before looking at any policy decisions at the October meeting, he said. External member Saugata Bhattacharya said monetary policy has to address multiple, often conflicting, objectives and optimise the consequent trade-offs. He highlighted the trade-off between loan and deposit rates as one of the key considerations. The central bank has a 4% inflation target, with a tolerance band between 2% and 6%. India reports GDP growth data on Friday.
Reuters
38 minutes ago
- Reuters
Russia expects India to keep buying its oil and seeks China-India-Russia talks
NEW DELHI, Aug 20 (Reuters) - Russia expects to continue supplying oil to India despite warnings from the United States, Russian embassy officials in New Delhi said on Wednesday, adding that Moscow hopes trilateral talks will soon take place with India and China. U.S. President Donald Trump has announced an additional tariff of 25% on Indian goods exported to the U.S. from August 27, as a punishment for buying Russian oil, which constitutes 35% of India's total imports compared with a negligible 0.2% before the Ukraine war. "I want to highlight that despite the political situation, we can predict that the same level of oil import (by India)," Roman Babushkin, the charge d'affaires at the Russian embassy in India, told a press briefing. He predicted India and Russia would find ways to overcome Trump's latest tariffs in their "national interests". Trade talks between India and the U.S. broke down over the opening up of India's vast farm and dairy sectors, as well as its purchases of Russian oil. The total tariff announced on Indian goods entering the U.S. is 50%. The Indian foreign ministry did not immediately reply to an emailed request for comment. It has previously said the U.S. decision to single out India for Russian purchases was "extremely unfortunate". Russia's Deputy Trade Commissioner Evgeny Griva on Wednesday said buying oil from Russia is "very profitable" for India, which will not want to change its supplier. On average Russia gives a 5%-7% discount to Indian buyers, he said, adding that Russia has a "very, very special mechanism" to continue oil supplies to India. In addition, he said Russia had started accepting Indian rupee payments for its goods after the resolution of issues that had trapped billions of dollars worth of funds in Indian banks. As tensions between Washington and New Delhi rise, high-profile visits from New Delhi and Beijing in recent weeks have raised hopes on the part of the Asian neighbours that ties damaged by a 2020 border clash can be repaired. Indian Prime Minister Narendra Modi plans to visit China for the first time in over seven years later this month. The planned visit was reported by Reuters last week, even as other high profile exchanges, including Chinese Foreign Minister Wang Yi's two-day visit to New Delhi, concluded. At the same time, Russia is trying to revive long-standing plans for a trilateral meeting with India and China to help them forge a "greater Eurasian partnership". "As far as the trilateral is concerned, we are quite hopeful that this format will be resumed sooner rather than later because its importance is not questioned," Babushkin said. "This is closely linked to the Russian initiative of the establishment of the greater Eurasian partnership," Babushkin said. Russian President Vladimir Putin will meet Modi in New Delhi by the end of year, he said. Putin, Modi and Chinese President Xi Jinping are also expected to all attend the Shanghai Cooperation Organisation starting August 31.
