Supertanker rates on the Middle East Gulf to East Asia run have reached a record $1.4 million per day, according to data compiled by Bloomberg, as the oil crisis spreads from crude markets into the shipping sector.

The driver is fleet utilization. A large tanker fleet is tied up in ship-to-ship transfers outside the Strait of Hormuz, removing vessels from the market and reducing availability for other routes worldwide.

Why are rates setting records?

The arithmetic is straightforward. VLCCs — very large crude carriers, the supertanker class capable of hauling roughly 2 million bbl per voyage — are sitting idle off the Hormuz chokepoint rather than discharging and returning to the spot market. Fewer free vessels chasing the same cargo volumes pushes daily hire rates higher.

Gulf-to-East Asia is the world's densest crude shipping lane, so it registers the squeeze first and hardest. That is where the $1.4 million/day record printed in Bloomberg's compiled data.

The tightness is not confined to the Middle East. Rates on the U.S. Gulf Coast-to-Japan route are also climbing sharply, an indication that tonnage scarcity in one basin is repricing long-haul Atlantic business as well.

What does this change for cargo economics?

At a $1.4 million/day basis, freight becomes a material line item in delivered crude cost for Asian refiners loading in the Gulf. Charterers who fixed earlier sit on a decided freight advantage; those re-entering the market face a materially higher landed cost.

The repricing also affects route competitiveness. When VLCC availability thins globally, arbitrage economics between basins shift, and U.S. Gulf-to-Asia barrels must absorb a freight component that is climbing in step with the Hormuz-driven tightness.

What is the watch item?

Vessel availability outside the Strait of Hormuz. The record rates persist as long as the ship-to-ship transfer backlog holds tonnage out of service. A normalization of those operations — or an escalation that ties up more vessels — will determine whether $1.4 million/day marks a peak or a waypoint.

Track Bloomberg's compiled rate assessments on both the Gulf-to-East Asia and U.S. Gulf-to-Japan runs in the coming weeks for direction.