By Tsvetana Paraskova for Oilprice.com
- China has imposed steep new port fees on U.S.-owned, operated, built, or flagged vessels — mirroring U.S. tariffs on Chinese ships.
- This new system of levies triggered turmoil in the global tanker market and drove freight rates sharply higher.
- Around 13% of the global crude tanker fleet could be affected, with VLCC rates on the Middle East–China route surging and a two-tier market emerging between China-compliant and non-compliant vessels.
The latest tit-for-tat fees on port callings in the U.S.-China trade spat threaten to create additional vortexes in global oil flows.
Shipowners and charterers are scrambling for clarity after China imposed this week a fee on U.S.-owned, operated, built, or flagged vessels, in retaliation for a similar U.S. move on Chinese ships. China-built ships are exempted from the new Chinese fee, but the impact on oil trade flows would still be significant, at least until owners and charterers find a way to move forward more smoothly in the choppy waters of renewed trade spats.
In these early days of the port fee escalation, the oil tanker market is in chaos as freight rates are rising on expectations of millions of U.S. dollars in additional costs per voyage, and cargoes are being delayed or canceled.
This new chaos creates inefficiencies in the tanker market, drives up freight costs, and adds to already upended flows with sanctions on Chinese crude import terminals and U.S. pressure on Russia's buyers to halt imports of Russian oil.
Tit-for-Tat Port Fees
The latest turmoil in the tanker market began at the end of last week when China announced it would impose, effective October 14, a port fee of $56 (400 Chinese yuan) per ton on U.S.-flagged, built, operated, or owned vessels at Chinese ports. The fee is set to rise each year, to reach as much as $157 (1,120 yuan) per ton by April 2028.
"China's position is consistent. If there's a fight, we'll fight to the end; if there's a talk, the door is open," a spokesperson for the Chinese commerce ministry said on Tuesday, as carried by the BBC.
"The US cannot demand talks while simultaneously imposing new restrictive measures with threats and intimidation. This is not the right way to engage with China," the spokesperson said in a statement.
The Chinese retaliatory fees are equivalent to the United States Trade Representative (USTR) charges imposed on Chinese owned/operated vessels.
And these have just thrown the tanker market into turmoil.
"It seems that, not for the first time, the shipping industry is caught up in the geopolitical jostling between the United States and China," U.S.-based brokers Poten & Partners said on Friday, shortly after China announced its tit-for-tat fees.
This week, shipowners are scrambling to obtain all relevant paperwork, and some are reshuffling corporate structures to lower American ownership to below 25%. A U.S.-held stake below 25% does not trigger the port fees in China.
Even if China-built vessels are exempted from the Chinese fees, 13% of the global crude tanker fleet will be affected by the port fees in China, according to Jefferies analyst Omar Nokta.
Tanker Rates Surge, Again
The result of all the tanker market chaos and uncertainty is soaring freight rates for supertankers to ship crude from the Middle East to China.
The spot rate for a very large crude carrier (VLCC) – capable of transporting up to 2 million barrels of oil – on the Middle East to China route jumped this week to the highest in nearly three weeks.
The previous surge in supertanker freight rates occurred last month as rising crude supply from OPEC+ and South America and a jump in longer-haul routes hiked freight rates for supertankers to levels last seen nearly three years ago.
VLCC rates on the benchmark Middle East-to-China route hit the threshold of $100,000 per day in September. That was the highest in almost three years and well above the previous 2025 high during the Israel-Iran conflict in June, when fears of disruption to supply or trade flows sent charter rates soaring.
Traders estimate for Reuters that a VLCC linked to the U.S. would now be hit with as much as a $15 million surcharge if it calls at a Chinese port—and no one is paying such massive fees.
"It's not just the dearth of China-compliant ships, it's also uncertainty of what is a China-compliant ship that's driving up freight costs in the near term," Anoop Singh, global head of shipping research at Oil Brokerage Ltd, told Bloomberg.
Due to the port fees and ongoing uncertainties, some ships were idling off China as of Wednesday, shipbrokers and traders tell Bloomberg.
As shipowners and charterers scramble to ease into the new tanker market reality, a two-tier market is emerging, they added. One group of vessel owners is willing to ship cargoes to China, while the other isn't. The former group is charging premiums to transport crude and other goods to China. The latter is seeking workarounds and is considering mid-voyage ship-to-ship transfers to avoid multi-million dollar fees at a Chinese port for a U.S.-linked vessel.
The port fees are the latest in a series of sudden shifts in global crude flows.
This week, supertankers have started to divert from their original destination of the Chinese port of Rizhao, after the U.S. blacklisted around 100 individuals, vessels, and companies—including the Rizhao Shihua Crude Oil Terminal, which is co-owned by Sinopec, China's top refiner.
Global crude flows are shifting again due to sanctions and trade disputes, and they could alter yet again in the near term if the U.S. succeeds in pressuring India to reduce Russian crude imports.
