New Delhi, Sept. 14 -- Freight rates for tankers headed to India have surged by around 150% as the worsening security situation in West Asia continues to disrupt shipping routes and raise risks for vessels operating through key maritime chokepoints. The rates, which were earlier around $100,000, have risen sharply amid growing concerns over the safety and availability of tankers.
The increase comes as Iran-backed Houthi forces have seized Yemen's Red Sea port city of Mocha and advanced towards the strategically important Bab el-Mandeb Strait. The developments have raised concerns over another major disruption to commercial shipping, at a time when traffic through the Strait of Hormuz remains severely affected. The Bab el-Mandeb is a crucial route connecting the Red Sea with the Gulf of Aden and is an important passage for ships travelling between the Middle East, Europe and Asia. Any further disruption could force vessels to take longer routes, increasing both travel time and transportation costs.
Higher security risks have also reduced the availability of tankers in the region. Shipowners are demanding higher freight rates to compensate for the additional risks involved in operating in conflict-affected waters. The increase in tanker rates is being accompanied by a rise in other shipping-related costs. Bunker fuel prices have climbed by around 50% to approximately $900 per tonne, while insurance costs have increased by about 20%. These additional expenses are adding to the overall cost of importing crude oil and other energy commodities into India.
The developments could put further pressure on India's energy import costs, particularly as the country relies heavily on overseas supplies of crude oil. Higher freight and insurance expenses can increase the landed cost of imported crude even if the underlying oil price remains unchanged. The shipping disruption comes amid a broader escalation across West Asia. Oil tanker rates on several major routes have reached record levels as attacks on commercial vessels and threats to key maritime routes have increased.
For India, prolonged disruption could have wider implications for refiners, shipping companies and the broader economy. Higher transportation and insurance costs could add to the pressure created by elevated crude oil prices and contribute to increased costs across the energy supply chain. The situation remains closely linked to developments around the Strait of Hormuz and Bab el-Mandeb, with any further deterioration likely to put additional pressure on global shipping and energy markets.
Published by HT Digital Content Services with permission from Millennium Post.