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Oil-Shipping soar as crisis reshapes global trade

Tankers are spending way more time on the water after the Russia-Europe energy breakup!

Oil tankers have been spending more time in transit to their destinations recently.

Tweet on supply chain and oil prices

WSJ on supply chain soaring prices amid the current crisis

A surge in the cost of shipping oil between the world’s ports is buoying energy prices, even as a gloomy economic outlook has dragged down crude near its lowest levels of the year.

Economic fallout from the war in Ukraine has severed many of the short oil- and petroleum-product trading routes across the Baltic and North seas. Now, as Europe scrambles to find new suppliers and Russia looks to send exports elsewhere, tankers are spending more time on water before reaching their destinations.

Many shipments now spend five times longer in transit to refineries or wholesalers than they would have before the conflict, tanker operators and analysts say.

Average tankers have earned more than $40,000 a day for four months, their longest such stretch in 15 years, according to London-based shipbroker Clarksons. The spot price for modernized ships known as very large crude carriers, which can stretch more than three football fields in length and carry two million barrels of oil, surpassed $115,100 a day on Nov. 18.

The price increases come at a key moment for oil markets, with the Organization of the Petroleum Exporting Countries and their Russia-led allies set to meet Dec. 4 amid flagging global demand and tensions with the U.S. The following day, Western governments will begin imposing sanctions against Russian energy exports that analysts expect will push traders to redirect more shipments on longer routes.

The soaring cost of transporting oil, which comes as ships carrying liquefied natural gas also fetch high prices, contrasts with plunging rates for container ships amid slowing demand from retailers and factories to move cargo.