The tense situation in the Red Sea region, which has lasted for over three months, shows no signs of ending. Under the ongoing conflict, the global oil transportation market has become increasingly tense, and the freight rates of large oil tankers have continued to rise recently.
According to reports, on February 24th local time, the United States and the United Kingdom launched a new round of attacks on more than ten targets in the areas controlled by the Yemeni armed forces. Subsequently, the armed forces of Houser also attacked the American oil tanker "Tolmtor" and multiple ships.
Under the ongoing conflict, the global oil transportation market has been fluctuating upwards since February. This week, the freight cost of a VLCC (Very Large Crude Oil Carrier) transporting oil from the Middle East to China reached a three-month high.
In addition, some industry organizations have reported that the Middle East market has been on the rise recently, with more cargo orders in late February, leading to an increase in freight rates. At the same time, the transportation capacity in the US Gulf market is tight, and short-term freight rates have also significantly increased.
According to data, the Suez Canal - Red Sea is one of the busiest shipping routes in the world. Under normal circumstances, about 13% of global maritime trade and 10% of maritime oil transportation pass through the Suez Canal.
Unlike the overall oversupply situation in the container shipping market, the current global oil tanker transportation market is characterized by tight supply and demand. According to data, the delivery volume of large crude oil transport ships will reach the lowest level in nearly 40 years in 2024.
Shipping agency Clarkson predicts that the total demand for crude oil tanker capacity in 2024 will be approximately 350 million deadweight tons, a year-on-year increase of 3.5%, but the total supply of capacity will only increase by 0.2%. The total capacity growth of the container shipping industry is around 8%.
On the other hand, amidst the global shortage of oil tankers, fleet efficiency has also declined due to the impact of the Red Sea conflict.
According to a report from the transportation team of Zhejiang Securities on February 19th, as of February 15th, the overall traffic volume of oil tankers in the Red Sea region has decreased by 51% compared to early December last year in terms of detours.
Guo Xin Securities analysts Luo Dan and Gao Sheng also stated in their report on February 19th that the Red Sea incident, the Russian oil ban, and global economic recovery will all bring about an increase in industry demand, while the aging of supply side ships and the lack of new orders will ensure the upward elasticity of freight rates. It is expected that the upward elasticity and center of freight rates are expected to continue to move upwards.
In history, the last time crude oil transportation prices skyrocketed occurred in 2019, also influenced by geopolitical factors in the Middle East. The daily rates of ultra large oil tankers rose from $25000 to over $150000 within six months.