Reliance pays record freight to charter supertanker for Iraqi crude

Reliance Industries has paid a record $23 million to $25 million to charter a supertanker for lifting Iraqi crude, according to three shipping sources. The charter hire, set at 1200 World Scale — 12 times the benchmark freight rate — is among the highest prices paid during the current conflict in the region.

The vessel, supplied by South Korea's Sinokor, will load 2 million barrels of oil from Iraq's Basrah Oil Terminal later this month. Before the war began in late February, similar voyages cost around $2 million, with freight rates at just 0.8 to 0.9 times the benchmark.

Shipping traffic through the Strait of Hormuz, the critical waterway for Iraq's seaborne oil exports, remains well below the pre-war average of 125 to 140 vessels per day. Attacks on commercial vessels have made shipowners wary of entering the strait, shrinking the pool of available tankers and driving up costs for every voyage.

Despite the record freight payment, Reliance is still expected to save millions on the overall cargo due to steep discounts offered by Iraq's state oil marketer SOMO. Iraq is offering crude at a discount of about $25 to $30 per barrel to Dubai benchmarks to entice buyers to lift cargoes from terminals inside the strait.

Several Indian and Chinese refiners have sought vessels this week to load crude at Basrah, attracted by the discounts, but no ships have been fixed so far as owners remain cautious about entering the waterway. Reliance and Sinokor did not respond to requests for comment.