The cost of transporting oil has surged on almost every mainstream trade route in the week since Hamas attacked Israel.
Freight rates on 16 global trade routes surged by an average of more than 50% compared with a Oct. 9, according to data from the Baltic Exchange in London. The single biggest gain in that period has been for shipments across the Mediterranean Sea, which doubled.
The origins of the rally stem from a prolonged period of heavy exports in the Gulf of Mexico, and has been added to by concern about the potential for disruption if a conflict between Israel and Hamas draws in other Middle East producers, according to Halvor Ellefsen, a London-based director at Fearnley’s Shipbrokers UK Ltd.
“Shipping historically has benefited from geopolitical turmoil,” said John Kartsonas, managing partner at Breakwave Advisors LLC, which runs exchange traded funds linked to shipping. “The urge to secure energy supplies is the first thing in mind of traders when wars or conflicts begin.”
The tanker industry typically measures rates in Worldscale points, which give owners and the companies hiring their ships an easy way to negotiate dollars-per-ton costs on thousands of individual trade routes. It climbed to 219.44 points in the Mediterraenan on Monday, up from 107.78 points a week earlier.