European Oil Prices, Tanker Freight Rates Climb Amid US, Israel Strikes on Iran
Refined oil prices and tanker freight rates for shipping refined products into Europe from the Middle East started to climb on the last trading day of February ahead of the U.S. and Israel launching an offensive against Iran, an analyst told OPIS Sunday.
Fright rates for Long Range 2 oil tankers shipping 90,000 metric tons of refined product from Ras Tanura in Saudi Arabia to Rotterdam, the Netherlands, jumped to $53.54/metric ton on Feb. 27, up from $44.72/mt a week earlier, according to data from the Baltic Exchange.
The CIF Northwest Europe diesel cargo price was assessed at $763.50/mt on Feb. 27, compared to $745.50/mt on Feb. 20, according to OPIS pricing data. European benchmark Brent crude jumped 10% to about $80/barrel over the counter on Sunday, according to media reports, citing oil traders.
On Saturday, the U.S. and Israel launched an offensive against Iran after weeks of military buildup and warnings from President Trump. Makai Marine Advisors managing director Jeffrey McGee said diesel and crude prices were already starting to edge higher in anticipation of an impact on European middle distillates supply.
“Europe is heavily reliant on the Middle East for middle distillate refined products,” said McGee. “The Middle East also makes up some 10% of the European crude slate. We have already seen diesel and crude prices edging up in anticipation of any impact on European middle distillates supply.”
Operations at ports in Bahrain, Kuwait, Oman and Saudi Arabia are currently proceeding as normal, according to an advisory from shipping logistics provider GAC on Sunday. However, Dubai has suspended all operations and is not berthing any vessel now for cargo operation, GAC said.
Meanwhile, the Wall Street Journal has reported that a commercial vessel was attacked as it crossed the Strait of Hormuz on Sunday. This was the second such incident in the waterway since the U.S. and Israel’s conflict with Iran began this weekend.
“All eyes will be on the oil futures markets when they open on Monday,” said McGee.
Reporting by Rob Sheridan, rsheridan@opisnet.com; Editing by Yazdi Merchant, ymerchant@opisnet.com