VLCC rates top $1 million daily as Iran war strains tanker fleet

EPA approves gene-edited trees, virus treatment for citrus greening

The Wall Street Journal reported that the daily cost of hiring a very large crude carrier — a VLCC — to load inside the Persian Gulf and transit the Strait of Hormuz topped $1 million earlier this month, the highest such rate on record. The figure came from Windward, a maritime intelligence firm cited by the Journal.

At current crude prices, the $1 million daily rate works out to about $26 a barrel — roughly a quarter of the value of the oil being carried. The Journal attributed the record VLCC rate to a sudden supply crunch among the world’s largest oil tankers.

The crunch stems from two overlapping forces, the Journal’s Rebecca Feng, Georgi Kantchev and Summer Said reported. Drone attacks earlier this month shut a Saudi Arabian bypass pipeline, forcing more crude back through the strait. The Iran war had already stretched the VLCC fleet thin, with longer voyages and shuttle runs around Hormuz tying up ships that would otherwise be available to move oil.

The Journal reported the impact has spread worldwide, reaching refiners far from the Persian Gulf. Fewer available tankers are slowing oil deliveries as record shipping costs squeeze refiners’ margins, the Journal said, threatening to keep fuel prices high even if global crude prices fall. The reported $1 million daily rate is the highest Windward’s tracking has recorded for a VLCC hired to load inside the Persian Gulf and transit the strait.

The same edition of the WSJ Logistics Report newsletter carries two other substantive items.

Kuehne+Nagel struck a deal with Amazon to bolster its role in data center infrastructure and strengthen the American tech giant’s customer service capabilities, the Journal’s Aimee Looks reported. The Swiss logistics company said the long-term partnership builds on an existing relationship and is designed to support future business opportunities. Under the deal, Amazon is granted a call option on K+N’s existing shares tied to commercial milestones or services. The call option, which Amazon can settle in cash or shares, is for up to seven years, K+N said. K+N said the partnership includes Amazon Web Services, which encompasses equipment deployment, maintenance and upgrades.

Separately, the Journal’s Julie Wernau reported that Florida’s orange production is down 95% since the arrival of a disease called citrus greening, which causes fruit to drop before it is ripe and leaves it tasting bitter. Last year, 60,000 orange acres went out of production — 26% of Florida’s remaining total. This year, the U.S. Environmental Protection Agency approved two technologies: one creates disease-resistant trees through CRISPR gene editing; the other puts a harmless virus into trees to help them resist citrus greening. Growers have ordered hundreds of thousands of resistant trees for planting in the spring, with about a million in production. It will be two years before the first oranges are ready for juice, the Journal reported, raising questions about whether the industry can hold on after losing more than half its workforce between 2003-04 and 2020-21, according to University of Florida studies.

“I’ve seen millions of trees come through here, and every one has more or less perished,” said Gary Farmer, head grafter at Agromillora Nurseries.

The tanker, Kuehne+Nagel-Amazon and Florida citrus items appeared in the WSJ Logistics Report, an email newsletter edited by Mark R. Long. Windward is a maritime intelligence firm.