Record oil tanker rates put pressure on Asian refiners, IEA says

London: The jump to record highs in the cost of shipping oil in supertankers is squeezing profit margins for Asian oil refiners, who are heavily dependent on Middle Eastern crude, the International Energy Agency said in a monthly report.

Asian oil refiners have faced the highest transportation costs as cargoes are moved through the Strait of Hormuz to secondary tankers for onward delivery, the IEA said.

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The freight rate for a VLCC (Very Large Crude Carrier) on a route from the Middle East Gulf to Asia had risen to around $36 a barrel by early October, more than five times the cost before the Iran war, the IEA added.

While refiners can partly offset this by buying US crude, those freight rates have also surged, with costs for the US Gulf Coast to China route exceeding $37 a barrel, it said.

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The resulting increase in delivered crude costs pushed margins for Asian refiners processing medium sour crude into negative territory in September, the IEA said.