U.S.-China oil tanker costs surge, pressuring Asia demand for U.S. crude
Shipping disruptions linked to the Iran war are driving up the cost of moving U.S. crude to Asia and curbing buying interest from regional refiners. Tanker lease rates for the Pacific route have climbed to nearly $80 million, putting U.S. exports to Asia on track for multi-year lows.
Highlights
- Asian refinery orders for U.S. crude in November dropped about 50% month-over-month to 24–26 million barrels, approaching a seven-year low.
- Surging U.S.-China oil tanker freight rates are eroding the economics of long-haul shipments and pressuring Asian demand for American crude.
- Record-high Pacific route shipping costs are prompting Asian refiners to consider alternative suppliers over U.S. exports due to increased delivered prices.
Freight costs and November orders
As first reported by Bloomberg, the sharp rise in tanker costs is weighing on flows of U.S. crude to Asian buyers as higher shipping expenses erode the economics of long-haul purchases.Asian refinery orders for U.S. crude to be delivered in November tumble about 50% from the previous month to 24 million to 26 million barrels this month, according to traders who asked not to be identified because they are not authorized to speak publicly. If that ordering pace holds through the end of the month, it would mark a seven-year low based on ship-tracking data from Kpler and Vortexa.
Impact on U.S.-Asia oil trade
The decline underscores how conflict-related shipping disruption can quickly reshape crude trade flows between the U.S. and Asia, a key outlet for American exports. With freight for the Pacific journey at a record level, refiners in Asia face higher delivered costs and may look to closer or cheaper supply alternatives.In our earlier article on the conflict-driven surge in crude shipping costs, we explained how attacks and elevated risk premiums on key routes have pushed tanker and insurance rates sharply higher, making freight a much larger share of the delivered oil price. We also noted the uneven fallout: import-dependent Asian markets and refiners face rising costs and margin pressure, while tanker owners benefit from record daily earnings as disruptions keep capacity tight.
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