Reliance Industries charters a VLCC for $23-25 million to transport 2 million barrels of Iraqi crude, marking a record freight rate amid geopolitical tensions.
According to Reuters, a record freight rate of $23–25 million has been established for the transport of 2 million barrels of Iraqi crude oil.
Indian Reliance Industries has chartered a VLCC owned by Sinokor for $23–25 million to transport 2 million barrels of crude oil from Iraq. A report based on three maritime sources from Reuters indicates that the freight rate at Worldscale 1200 level has reached 12 times the benchmark rate.
The security risks surrounding the Strait of Hormuz and the decreasing number of vessels willing to enter the region have resulted in an extraordinary price for one-time VLCC freight. The total freight cost for the supertanker chartered by Reliance Industries from South Korean Sinokor to load Iraqi crude oil in the second half of August was estimated at $23–25 million.
The cargo of 2 million barrels was linked to Worldscale 1200. Worldscale is a tariff system that measures standardized transportation costs for tanker voyages; the 1200 level indicates that approximately 12 times the benchmark freight rate is being paid for this transaction. According to sources speaking to Reuters, the cost of a similar voyage before the war was around $2 million.
Despite the record freight rate, the factor that made the transaction possible is that Iraq's state oil marketing company SOMO is offering crude oil at a discount of $25–30 per barrel compared to Dubai benchmarks. Thus, the sharp increase in freight costs is partially offset by the reduction in the price of the cargo. Other Indian and Chinese refiners are also interested in similar cargoes, but it has been reported that no new connections have been made yet due to shipowners' reluctance against the risk of attacks.
The number of commercial vessels passing through Hormuz continues to remain well below the pre-regional war average of 125–140 vessels per day. This situation affects not only the freight rate but also the certainty of loading schedules, war risk insurance, and the vessel's next position. Reliance and Sinokor did not respond to Reuters' requests for comments.
Maritime impact: The $23–25 million one-time freight demonstrates how much geopolitical risk can change the cash voyage cost independently of tanker asset value. The high price may attract VLCC supply willing to enter the region; conversely, insurance, crew, and subsequent employment uncertainties may continue to limit tonnage.
Source: SeaNews Türkiye
