Transport costs for Very Large Crude Carriers (VLCCs) on the Persian Gulf to China route reached a new peak this week. The daily hire rate for these vessels more than doubled from the $510,000 average seen 30 days ago, crossing the $1 million mark on Monday for the first time. These pricing levels have made transporting 160 barrels in a 40 foot container more economical than hiring a supertanker on a per barrel basis.

The surge follows a drone attack on Saudi Arabia's East-West pipeline that disrupted 4 million BPD of oil flow to the Red Sea port of Yanbu. Saudi Arabia is currently boosting shipment volumes through the Strait of Hormuz to compensate for the outage, as Yanbu storage capacity can only sustain exports for 5 to 7 days. Industry sources estimate repairs to the damaged pumping stations will take between 3 and 6 weeks.