Oil freight rates surge on tight supply

SINGAPORE: Freight rates for Very Large Crude Carriers (VLCCs) have surged to their highest levels in more than two years, driven by a combination of rising Middle East oil exports, strong Asian demand, and tightening vessel availability.
The key VLCC spot rate for the Middle East-to-China route (TD3C) rose to W108 on the Worldscale measure — the highest since November 2022 — equivalent to at least $6.6 million per voyage, based on industry estimates. Overall, rates have climbed nearly 150% since the start of 2025.
“We are seeing continuous cargoes from the Middle East and Atlantic, while the vessel tonnage list is balanced to tight,” a shipbroker told Reuters.
Crude exports from the Middle East are expected to exceed 18 million barrels per day in September — the highest since April 2023 — after OPEC and its allies (OPEC+) agreed to increase oil production. At the same time, Asia’s strong appetite for crude is pulling in supplies from the Atlantic Basin, requiring tankers to travel longer distances.
For example, Indian refiners have increased their purchases of US crude for delivery in October and November, while Chinese independent refiners are buying oil from Brazil and West Africa. These long-haul voyages have absorbed more vessels, tightening availability in mainstream shipping routes.
“The main drivers behind the surge in September have been the open arbitrage for US Gulf-to-East Asia flows and the subsequent tightness created by vessels committing to these very long-haul voyages,” said Sentosa Shipbrokers.
Anoop Singh, global head of shipping research at Oil Brokerage, noted that Saudi Arabia has been exporting more crude as domestic power generation needs ease following the summer months. He added that the strength in Dubai crude prices is keeping the arbitrage window open.
“The short-term outlook is for the momentum to carry through till the end of the year and into Q1 next year,” Singh said. He added that any loss of medium-quality crude supply — such as Russian grades under geopolitical pressure — could further support prices and tighten the market.
Separately, US President Donald Trump said on Saturday that the US is prepared to impose new energy sanctions on Russia — but only if all NATO nations stop buying Russian oil and implement similar measures.— Reuters