High tanker freight costs crush US-to-Asia crude oil demand

US crude oil export orders to Asia for November delivery dropped roughly 50 percent sequentially to between 24 million and 26 million barrels, marking a potential seven-year low due to soaring shipping costs.

Tanker freight rates along the US Gulf Coast-to-China route surged to nearly $60 million as of Thursday, and touched $79.6 million earlier in the month, compared to an average of less than $8 million prior to the US-Iran conflict.

Valero Energy's head of oil trading Randy Hawkins noted that refiners are paying an effective $30 to $35 in haulage costs per barrel, driven higher by inefficient ship-to-ship transfers in the Gulf of Oman.