Record $7 mil Aframax freight for ESPO crude to China amid tonnage shortages

New sanctions against Russian entities, resulting in the blacklisting of over 180 ships, have led to a surge in demand for non-sanctioned tonnage, pushing Aframax tanker freight rates on the Kozmino-to0China 100,000-mt route to an all-time high of $7 million on Jan. 21, S&P Global Commodity Insights data showed.
This marked a staggering 324.2% increase, or about a fourfold rise, from $1.65 million on Jan. 2, setting a record since Platts launched the route on July 2, 2018.
From 2018 until the end of 2021, the average freight rate for the route was $560,000; however, rates surged above the $1 million mark in mid-April 2022 and have not fallen below that level since.
The sustained increase was largely attributed to a sharp decline in ship availability, as stricter sanctions imposed by the EU and UK on Russia following its invasion of Ukraine discouraged many ships from calling at Kozmino.
Compounding this issue, Shandong ports have banned US-sanctioned tankers from entry, further exacerbating ship shortages. As a result, the supply of Aframaxes — the primary ship type for transporting ESPO crude — has been significantly disrupted, forcing charterers to pay a premium to secure non-sanctioned tonnages, according to sources.
Ship pool
S&P Global Commodities at Sea(opens in a new tab) data showed that over June-December 2024, 71 ships formed the pool loading ESPO crude in Kozmino, of which 56 were listed on the OFAC-sanctioned list, leaving only 16 ships unsanctioned and eligible for loading.
This restricted 79% of the available tonnage, exacerbating the tight supply and pushing freight rates to unprecedented levels, which at the current rate translates to $70/mt to deliver ESPO crude to North China ports. The time-charter equivalent, or earnings accrued to owners at the rate of $7 million on the Kozmino-China 100,000-mt route, is presently at a whopping $500,000/day, according to tanker market sources.
The monthly count of shipments from Kozmino fluctuated in the latter half of 2024, peaking at 30 in August before declining to 24 in December, CAS data showed.
The limited availability of ships has intensified competition between charterers, driving up freight rates further, according to market sources.
“Freight rates have increased by more than 3-4 times because the number of available ships has decreased by 3-4 times,” a broker said.
It remains uncertain whether the freight rally will continue, as the transition to Donald Trump’s presidency in the US and the recycling of some ships to resume ESPO loading could change the freight market, according to sources.
ESPO price
The surging freight rate has driven FOB differentials for Russia’s ESPO Blend crude — which loads from Kozmino — to its lowest in more than two years.
Platts assessed the front-month ESPO Blend at an $11.50/b discount to Platts Dubai crude assessments, FOB, on Jan. 21, Commodity Insights data showed, a low last exceeded on Sept. 2, 2022, when it was at a discount of $12/b to Platts Dubai, FOB.
Source: Platts