Red Sea Tensions Drive Tanker Freight Up 60%, Reroute Global Flows an Hit Jamaica Bill
Houthi attacks an Red Sea instability add 60% to tanker freight rates an force vessels around di Cape of Good Hope, raisin Jamaica imported fuel cost by an estimated US$3 per barrel.
Ongoing Houthi attacks pon commercial shippin in di southern Red Sea an Bab el-Mandeb strait push tanker freight rates up roun 60% compared to early 2024 levels. Worldscale time charter equivalent (TCE) earnings fi VLCCs (Very Large Crude Carriers) average US$58,000 per day in November, up from US$36,000 a year earlier, while Suezmax an Aframax rates show similar gains. Di International Maritime Organisation (IMO) classify large portions of di Red Sea as high-risk, an war risk insurance premiums add roun 0.7% of hull value per voyage.
Roun 75% of tankers transitin between di Arabian Gulf an European or Atlantic destinations now reroute around di Cape of Good Hope, addin 10 to 14 days to voyage times an roughly 6,500 nautical miles. Di knock-on effect a tighten di global fleet availability an increase tonne-mile demand by an estimated 12%, accordin to Clarksons Research. Owners includin Frontline, Euronav, DHT Holdings an Teekay a benefit from di rate environment, while charterers an end consumers a absorb di cost.
Fi Jamaica, di Red Sea disruption add roun US$3 per barrel to di delivered cost of Middle Eastern crude an products, doh Petrojam source most of im feedstock from Atlantic basin suppliers (Venezuela, Colombia, Brazil, US Gulf Coast). However, di indirect effect through di global gasoline an diesel arbitrage a real. European refiners weh historically receive Asian an Middle Eastern product flows now face shortage, drawin in Atlantic basin barrels weh otherwise might come to di Caribbean. Wholesale gasoline prices at Petrojam terminal rise roun J$6 per litre over di past 12 months partly due to dis dynamic.
Di Suez Canal Authority report transit volumes fall 55% from pre-crisis levels, costin Egypt over US$8 billion in lost revenue annually. President al-Sisi government a engage wid Western powers, Saudi Arabia an Iran fi seek a de-escalation, but di Houthi position remain linked to di broader Israel-Gaza conflict. US Navy an European-led Operation Aspides continue fi escort merchant vessels, an di campaign cost over US$2 billion fi date.
Beyond freight rates, di disruption a accelerate strategic shifts. Asian buyers increasingly source crude from di Americas (Guyana, Brazil, US) an from West Africa, reducin Middle East share of imports. China teapot refiners a take more discounted Russian ESPO an Iranian crude, while Indian Reliance an IOC also a load up. Di geographic reshape of global oil flows likely fi persist even after di Red Sea reopens, since shippin contracts an pipeline investments take years fi adjust.
Fi Jamaica Maritime Authority an di Port Authority of Jamaica, di disruption create both challenge an opportunity. Higher freight cost hurt consumers an di Bank of Jamaica inflation target, but di rerouting of trade also lift transhipment volumes at Kingston Container Terminal. Total throughput grew 8% in di first nine months of 2025, an di expanded berth depth post-recent dredging allow di facility fi handle Neopanamax vessels efficiently.
Looking ahead, even a partial Red Sea normalisation unlikely fi return freight rates fully to 2023 levels. Owners a now requirin longer-term charters at higher rates, an di IMO 2030 sulphur an carbon intensity rules add structural cost. Jamaica importers should plan fi a sustained premium of US$2-4 per barrel relative to pre-crisis benchmarks.