Perspective on freight rates from geopolitical tensions and the US - Asia oil & gas transportation route
• Geopolitical tensions show no signs of easing. In the past month, cargo volume through the Suez Canal has dropped by 74% compared to 2023, totaling only 1.2 million tons. In contrast, throughput through the Cape of Good Hope has increased by 65%, reaching nearly 6.0 million tons. Houthi attacks on Israel in the Red Sea may lead to higher freight rates for oil tankers, while the transportation route remains longer. According to BIMCO forecasts, this tense situation is expected to continue into 2024, supporting maritime freight rates.• Increased oil production under the Trump administration is likely to boost transportation flows from the U.S. Gulf to the Asia-Pacific region. The International Energy Agency (IEA) predicts that global oil supply will increase by 1.9 million barrels per day (mb/d) by 2025, while demand will rise from 840,000 barrels per day to 1.1 mb/d, primarily driven by the Asia-Pacific region.
• OPEC+'s maintenance of production cuts may help stabilize the oil market. In this context, Vietnamese shipping companies are expanding their operations to the U.S. and Europe, forecasting a continued positive outlook for the oil and gas transportation sector in the near future.
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