High risk, high reward: South Korean oil tanker giant may earn hundreds of millions of dollars by sailing through the Strait of Hormuz
Just weeks after the Iran war broke out, a major oil producer in the Persian Gulf quietly began smuggling crude oil out of the Strait of Hormuz. Before long, the covert operation was so effective that by the time the United States and Iran signed an interim peace agreement, the volume of UAE crude oil exported through the waterway was approaching pre-war levels. The UAE safely transports large amounts of crude oil out of the strait by relying on a method commonly used by sanctioned countries such as Iran, Russia and Venezuela: allowing tankers to "stealth" with their transponders turned off (often under the cover of darkness), then transfer the crude oil to other tankers waiting outside, and then return to repeat the operation. But crucially, Emirati officials need enough ships to carry out the high-risk crossing — not just once, but repeatedly. To this end, they asked Ga-Hyun Chung for help. At the beginning of this year, the extremely low-key shipping tycoon shocked the industry when his subsidiary Changjin Merchant Shipping embarked on an unprecedented acquisition. Bloomberg News reported in March that he would be one of the main beneficiaries of the oil market turmoil following the outbreak of the Iran war as tanker freight rates soared. Today, Changjin Merchant Shipping has become a major owner of very large tankers that transport crude oil out of the Persian Gulf. The company has been leasing vessels to Abu Dhabi National Oil Company for "feeder transportation" since at least mid-April. By June, almost half of the UAE's crude exports were carried by vessels controlled by Changjin Merchant Shipping, according to ship tracking data collected by Vortexa. Changjin Merchant Marine did not respond to a request for comment. Adnoc L&S, the shipping and logistics subsidiary of Abu Dhabi National Oil, said it does not comment on the location, movements or routes of its ships, but noted that it has "a large fleet of owned and chartered vessels." Although ADNOC also uses tankers it directly owns as well as tankers from other shipowners, the UAE has been able to increase exports through the Strait of Hormuz faster than other Gulf neighbors, thanks to the Changjin Merchant Shipment deal. Changjin Merchant Marine, Chun and their new joint venture partner Italian container shipping giant MSC Group have also gained huge profit opportunities. This year has been one of the most profitable years ever for the tanker market, with shipbrokers saying the premiums charged for sailing into the Gulf during the war could be three to four times higher than pre-war prices. Terms of the deal have not been disclosed, but these brokers estimate that just three tankers carrying out "feeder transportation" since mid-April may have earned Changjin Merchant Shipping about $60 million to $120 million. After the temporary ceasefire agreement between the United States and Iran came into effect, Changjin Merchant Shipping has dispatched more supertankers to the Persian Gulf to prepare to load crude oil - at least two of them have already sailed out of the strait and returned after unloading. And the company not only transports UAE crude, it also actively markets its services to shipbrokers looking to load crude from other parts of the Gulf. "Changjin Merchant Ship's actions during the Iran war were groundbreaking," said Matt Wright, chief freight analyst at Kpler. “By creating an environment favorable to their own negotiating position, they drive up freight rates for all shipowners.”