U.S.-to-China Crude Freight Rises About $31 a Barrel as Costs Near $40

Estimated tanker freight for a November voyage from the U.S. Gulf Coast to China reached about $40 per barrel, roughly $31 above the cited prewar rate and adding sharply to delivered crude costs in Asia.

The estimate covered a 2-million-barrel cargo and reached $80 million during the week of Oct. 5-9. Dividing that amount across the cargo yields about $40 in freight per barrel. It does not include the crude’s purchase price.

Comparable prewar freight was $8.60 a barrel. The difference is about $31.40 per barrel in transport costs for that route and cargo size; it does not mean crude prices themselves rose by that amount.

Monthly U.S. Gulf-to-China very large crude carrier freight assessments averaged $79.21 per metric ton in August and $156.19 in September. Those monthly per-ton figures measure the route differently from the $80 million estimate for one voyage, so the measures are not directly interchangeable.

“Oil, in reality, is $125 per barrel or higher,” energy reporter Brian Sullivan wrote. The freight calculations alone do not establish that delivered price because they do not provide a crude benchmark price to add to shipping costs.

Inefficient ship-to-ship transfers amid Strait of Hormuz disruption and more Atlantic Basin crude moving toward Asia have reduced available tanker capacity. The increase adds to the freight squeeze on U.S.-Asia crude trade, making U.S. cargoes less attractive to Asian refiners.