The cost of fuel shipping from the Middle East to Africa is at its highest level in three months

The prices of shipping refined oil products like gasoline and diesel from the Middle East to East Africa have reached their highest level in three months, according to data from the Baltic Exchange. Prices on the TC17 route, which measures the cost of shipping a cargo of approximately 35,000 tons, increased by about 28 points compared to last week, reaching 276.43 points on Wednesday, which is the highest level since October 2023, as Bloomberg explains.

In related news, Goldman Sachs bank stated that oil shipments through the Red Sea have decreased by 900,000 barrels per day since disruptions began on the main maritime route, amounting to a 15% drop based on the 14-day moving average. This estimate was made based on ship-tracking data from Kepler, where the ship and cargo must have their transmitters and receivers operating for monitoring.

According to analysts at the bank, including Dan Stroeven, in a memo dated January 10th, the prices of shipping environmentally hazardous oil tankers have increased by one dollar per barrel since the start of the disruptions.

The impact of shipping costs on the oil market is demonstrated as the rising shipping fees prompt crude oil buyers in Asia to shift towards purchasing more Middle Eastern oil, consequently supporting spot market prices.

Traders say that the surge in shipping prices caused by a wave of ship bookings is making long-distance shipments, such as American flows, very expensive for Asian consumers. This has led buyers to increase their demand for immediate barrels from the Arabian Gulf, which has boosted shipping premiums and helped support the market at the same time.

Oil prices have seen significant fluctuations since the beginning of the year, with traders assessing demand expectations along with a wide range of current tensions in the Middle East. The decision by the Kingdom of Saudi Arabia to reduce official oil prices shipped to Asia shed light on the underlying weakness in the market, but the surge in shipping prices is now reverberating in the market.

The shortage of available carriers led to an increase in shipping prices during the past week as a result of a wave of reservations for giant carriers designed for long-haul trips by Sinokor Merchant Marine, which reduced the availability of ships in the market.

The shipping prices for the trip from the US Gulf Coast to China rose to $9.86 million on Tuesday, an increase of approximately $2 million compared to the previous week, according to data from the Baltic Exchange.

Eight out of the top 10 shipping companies have halted their ships from crossing the Red Sea, and the attacks on ships in the Red Sea have given an additional boost to shipping prices.

The Houthi rebels in Yemen recently launched one of their largest missile and drone attacks to date on commercial shipping routes in the Red Sea, highlighting the ongoing tensions in the region.

Energy analysts at “Energy Aspects” do not expect similar price increases in shipping rates throughout the week, but anticipate them to remain high before the long weekend in the United States due to a decrease in available shipping vessels, overall strong morale, and challenges in transferring cargo between ships caused by weather conditions. It should be noted that January 15th is a federal holiday in the United States.