(Bloomberg) -- Oil-freight derivatives trading surged to the highest in at least a decade as the Biden administration’s sanctions on Russia continued to propel supertanker rates higher.
Almost 30,000 crude tanker forward freight agreements, or FFAs, traded in the week to Monday, the largest amount since at least 2014, the most recent data from the Baltic Exchange in London show. The contracts are used to bet on, or hedge, future movements in shipping costs.
Daily earnings for 2 million-barrel transporting supertankers recorded their biggest two-day gain in 19 months as markets continue to feel the effects of Friday’s unprecedented US sanctions on Russia’s oil shipping and trading network.
“The sanctions were the trigger, but it’s more sentiment driven at this point,” said John Kartsonas, managing partner at Breakwave Advisors LLC. “For oil traders, the natural reaction is to secure transportation.”
Earnings on the Middle East-to-China route, an industry benchmark, jumped for a fifth session to almost $50,000 a day, the highest since May last year, according to Baltic Exchange data on Tuesday. They’ve rallied by more than $22,000 in the two sessions since the sanctions were announced.
Refiners in Asia have been racing to secure barrels after the US blacklisted about 160 oil tankers and major producers on Friday. Russia’s customers in Asia have approached the country’s OPEC+ counterparts in the Middle East in case there’s a supply gap, officials said on Tuesday.
Rates as measured by the tanker industry’s Worldscale system rose to 70.45 points, up 42% since Friday.
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