Hiring a US-to-China Tanker Now Costs More Than a SpaceX Launch

A US-to-China tanker voyage now costs more than a rocket launch

Chartering a very large crude carrier from the US Gulf to China now costs around $80 million, more than the roughly $74 million price of a standard Falcon 9 launch, according to Bloomberg and shipbroker Gibson. It is an absurd-sounding comparison that captures how far tanker rates have run.

The spike is historic. SSY data shows inflation-adjusted VLCC rates are at their highest since the first supertankers sailed in the 1960s, above even the 1980s tanker wars. Reuters reported on October 9 that freight now adds roughly $40 a barrel to delivered crude, versus $8.60 before the war in Ukraine, or about half the price of WTI futures.

The numbers behind the move are stark. Trafigura chartered a VLCC at $76 million, about ten times the $7 to $10 million pre-war norm for the route. Vitol CEO Russell Hardy called the market "pretty parabolic pricing." The US-Asia arbitrage has slammed shut, and refiners are shifting to Middle Eastern Murban crude instead.

What drove it is a pile-up of sanctions and shadow-fleet disruption that has pulled compliant tonnage off the market and left charterers bidding against each other for the remaining ships. Every rate record this week is a lump-sum voyage charter for roughly two million barrels, not a daily rate, but the direction is unmistakable.

The rocket comparison will not last forever, but it tells you where the oil market's stress is sitting right now: not in the crude price, but in the cost of moving it.

Source: Bloomberg, Reuters, SSY, Gibson.