Former U.S. President Bill Clinton once said that when a crisis breaks out, the first thing everyone in Washington asks is, “Where is the nearest (aircraft) carrier?” That remains a critical question as the U.S. faces off against Iran in the Strait of Hormuz, but for the shipping industry, it may have been replaced by another: “Where are the nearest oil tankers — and do we have enough?”
The immediate answer to that last bit is “no.” The price of shipping tells the story. The largest tankers, uncreatively known as Very Large Crude Carriers, or VLCCs, are enjoying daily rates that would have made Aristotle Onassis cry tears of joy: The cost of hiring one from the Persian Gulf to Asia — a benchmark route — has risen 12-fold in just a few months to a record high of $1.1 million a day.
Earlier this year, most shipowners would have considered $100,000 a day a superb price and $50,000 a good one. Poten & Partners, a shipbroker that prides itself on being old-fashioned, couldn’t hide its amazement at today’s rates, telling clients recently: “Even seasoned market veterans are looking at current developments in the market and scratching their heads. What’s happening is truly unprecedented.”
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