Middle East crude oil exports surge, with tanker rental rates skyrocketing

Against the background of possible military conflicts between the United States and Iran, the recent oil exports in the Middle East have significantly increased. Due to traders hoping to lock in shipping capacity before potential conflicts erupt, the transportation costs of oil tankers have also sharply risen. Data from the London Stock Exchange Group (LSEG) shows that on Tuesday, the daily rental rate of Very Large Crude Carriers (VLCCs) transporting oil from the Middle East to China has exceeded $170,000, the highest level since April 2020. Shipping analysis company Kepler's data shows that in February, the oil export volume from the Middle East exceeded 19 million barrels per day, also the highest level since April 2020. The export growth is mainly from Saudi Arabia, the United Arab Emirates, and Iran. Analysts believe that the rise in VLCC shipping rates is supported by several factors: the return of Venezuelan crude oil to compliant fleet transportation, no longer dependent on so-called "shadow fleets," has squeezed available shipping capacity; OPEC+ increasing production has increased shipping demand; in addition, global refineries maintain strong demand for crude oil, with India being particularly prominent as its crude oil purchases are shifting from Russia to the Middle East.