Shipping analysts and traders reported that the number of oil tankers available along the U.S. Gulf Coast had dropped sharply over the past few weeks as Asian and European refiners, cut off from Middle Eastern supplies, have purchased vessels to import fuel and oil from the United States.

The Iran War has caused tanker traffic through the Strait of Hormuz to be halted, reducing the flow of Middle Eastern crude oil into Asia and Europe. Refiners in Asia and Europe have been forced to purchase replacement barrels imported from the United States and Brazil, as well as West Africa.

Aristidis Afouzos is the chief executive officer at Okeanis ECO Tankers. He said that the demand for tankers on the U.S. Gulf Coast has increased due to the wider discounts offered by U.S. crude compared with Brent crude, the global benchmark. This has led to a reduction in vessel availability.

On Wednesday, U.S. West Texas Intermediate oil futures for June delivery traded at a discount of over $10 to June Brent futures. .

Alafouzos stated that the surge in freight rates was unprecedented. Suezmaxes, and Aframaxes, earned upwards of $300,000. This is compared to an annual average of $60,000 during the last five months.

Potential Cost to Consumers

Analysts fear that the rising cost of fuel and oil around the globe could have a negative impact on the economy as they are passed onto consumers through the price of everyday items.

The Signal Group's shipping analytics platform, The Signal Group, reported that the availability of net vessels along the U.S. Gulf Coast had decreased by 41% in the last month. The data revealed that the availability of Very Large Crude Carriers, which can transport around 2 million barrels, had been reduced by half to 10 vessels last week from 20 on 1 March.

The 'Signal Group' data also showed that smaller Suezmax and Aframax ships, which are capable of loading about 750,000 and 1 million barrels, respectively, were in short supply. The Signal Group's senior analyst Maria Bertzeletou said that since the end of January Suezmax tanker supply along the U.S. Gulf Coast has decreased by approximately?40-45%. Aframax has also dropped about 70% from its mid-February peak.

Bertzeletou stated that the tightness coincides with an increase in fixture activity along the U.S. Gulf Coast-Asia route.

The Signal 'Group data revealed that at least 10 vessels were fixed to haul fuel or oil from the U.S. Gulf Coast into Asian markets in the last seven days. These vessels are destined for Pakistan, Korea, and South China.

Matias togni, an oil and shipping analyst with NextBarrel, explained that the movement of cargoes eastward, first VLCCs heading to Asia, and then smaller vessels catering to European demands, has led to a surge in freight prices. (Reporting from Anushree mukherjee and Shariq khan in New York, with editing by Emelia Sithole Matarise.)

(source: Reuters)