Asian Buyers Shift to Smaller Tankers Amid Shipping Crisis

Record-high freight costs are pushing Asian crude buyers to use smaller tankers and long-term charters to secure supply.

The surge in shipping costs for crude oil has forced Asian buyers to alter their sourcing strategies, opting for smaller vessels and long-term charter agreements. This shift is driven by the Iran conflict, which has disrupted trade routes and increased the time supertankers spend on inefficient voyages. The use of ship-to-ship transfers in the Gulf of Oman has further strained the availability of very large crude carriers (VLCCs), affecting key trade routes like the U.S. Gulf Coast to Asia. As a result, refiners are facing record-high freight costs, effectively closing the arbitrage opportunity between the U.S. and Asia.