Strait of Hormuz peril rattles ships, tests UAE trade routes

FREIGHT RATES SURGE AS SECURITY RISKS RISE AROUND CRITICAL CHOKEPOINT

- BY JUSTIN VARGHESE Your Money Editor

photo shows a boat firing a missile during a recent military exercise in the Gulf.

(AFP)

Oil freight rates are surging and maritime traffic is stalling around the Strait of Hormuz, putting the UAE at the centre of a rapidly escalating disruption to global energy and trade flows.

Shipowners are demanding sharply higher fees to move crude out of the Gulf after US and Israeli strikes on Iran triggered retaliatory action and heightened security risks in the narrow waterway that carries roughly a fifth of the world’s oil.

South Korea’s Sinokor is seeking about 700 Worldscale points to transport Middle East crude to China on very large crude carriers, according to shipbrokers. Two brokers said that level would translate to roughly $20 a barrel for cargoes discharged in eastern China, compared with an average of about $2.50 last year.

A tanker controlled by Greece’s Dynacom Tankers Management was provisionally leased at 525 Worldscale, equivalent to daily earnings of about $350,000, according to a person with knowledge of the matter.

The Baltic Exchange said it is consulting panellists on how to respond to conditions in Hormuz as it determines benchmark freight assessments.