VLCC Rates Hit Record $1.27 Million a Day as Oman Transfer Capacity Maxes Out
Ship-to-ship crude transfer capacity off Oman has reached its limit after Saudi Arabia rerouted exports from Yanbu following Houthi attacks, Reuters reported, citing unnamed trading sources and analysts. The squeeze on available very large crude carriers (VLCCs) has pushed daily freight rates to a record $1.27 million, according to LSEG data.
Why It Matters
The diversion of Saudi flows and increased use of ship-to-ship transfers is intensifying demand for VLCCs, tightening global tanker supply and raising shipping costs — factors that affect the logistics and pricing of crude exports. These developments reflect operational shifts tied to regional security risks rather than changes in production volumes.
Key Facts
- Record VLCC daily rate: $1.27 million (LSEG data, as of Monday)
- Saudi crude sold for Gulf of Oman shipment: About 60 million barrels (for delivery this month and October)
- Average daily barrels shipped via the route in September: 3.6 million barrels (Kpler)
- Average daily barrels via the route in August: 900,000 barrels
- Additional VLCCs estimated needed: 36 to 40 extra VLCCs (Kpler analyst Panagiotis Krontiras)
Trading sources and analysts told Reuters that ship-to-ship crude transfer capacity off the coast of Oman is fully utilised after Saudi Arabia shifted exports away from the port of Yanbu amid attacks by Yemen’s Houthi rebels. The rerouting involves smaller tankers loading at a Persian Gulf coast, transiting the Strait of Hormuz and handing cargo to larger supertankers in the Gulf of Oman.
Reuters reported that Saudi Arabia has arranged sales of roughly 60 million barrels of crude to be shipped from the Gulf of Oman for deliveries this month and in October. The increased use of transfers along this route has driven the daily volume handled in September to about 3.6 million barrels, up from roughly 900,000 barrels in August, Kpler data shows.
Analysts warn the operational shift substantially raises demand for very large crude carriers. Kpler analyst Panagiotis Krontiras estimated the extra volumes require between 36 and 40 additional VLCCs. Oil Brokerage’s head of global shipping research, Anoop Singh, said the change means the same export quantity that needed 24 VLCCs in August now calls for about 40 vessels because of the ship-to-ship transfer pattern and shuttle runs.
Tanker availability is further constrained by about 20 vessels currently waiting in the Red Sea for Yanbu to resume operations, Reuters noted. The squeeze on supply has pushed daily VLCC freight rates to an all-time high of $1.27 million, according to LSEG data cited in the report.