*

VLCC rates for Mideast to China up 39% since Friday

*

Shipping costs for Russian ESPO Blend to China more than

double

- S&P Global

*

Fleet tightness could worsen if shadow fleet seeks new

vessels -

Kpler

(Updates with new tanker bookings, crude prices in paragraphs

9-11)

By Florence Tan and Siyi Liu

SINGAPORE, Jan 14 (Reuters) - Supertanker freight rates

jumped after the U.S. expanded sanctions on Russia's oil

industry, sending traders rushing to book vessels to ship supply

from other countries to China and India, shipbrokers and traders

said.

Chinese and Indian refiners are seeking alternative fuel

supplies as they adapt to severe new U.S. sanctions on Russian

producers and tankers designed to curb the world No. 2 oil

exporter's revenue due to its war in Ukraine.

Many of the newly-targeted vessels, part of a so-called

shadow fleet that seeks to avoid Western restrictions, have been

used to ship oil to India and China, which snapped up cheap

Russian supply that was banned in Europe following Moscow's

invasion of Ukraine. Some of the tankers have also shipped oil

from Iran, which is under sanctions as well.

The latest U.S. action means an estimated 35% of some 669

shadow fleet tankers involved in shipping Russian, Venezuelan

and Iranian oil have been hit with sanctions by either the U.S.,

Britain or European Union, according to analysis by Lloyd's List

Intelligence.

Freight rates for Very Large Crude Carriers (VLCCs), that

can carry 2 million barrels of crude across major routes, jumped

after Unipec, the trading arm of Asia's largest refiner Sinopec

, chartered several supertankers on Friday, the

sources said.

Unipec also last week snapped up several sweet crude cargoes

from Europe and Africa, including 2 million barrels of Norwegian

Johan Sverdrup, 1 million barrels of Senegal's Sangomar crude,

Ghana's Ten Blend, Angolan Djeno and others, traders said.

"They must look for alternative crudes. That is the primary

driver for the rally (in freight rates)," said Anoop Singh,

global head of shipping research at Oil Brokerage.

Middle East crude benchmarks rallied for a second session on

Tuesday, with premiums for Dubai, Oman and Murban rising towards

$4 a barrel to Dubai quotes, the highest levels in more than a

year, Reuters data showed.

Since Friday, Unipec has booked eight tankers to ship oil

from the Middle East, tanker booking data showed on Tuesday.

Other Chinese buyers, Petrochina and Rongsheng, each fixed a

tanker to transport Middle East crude, the data showed.

On a daily basis, a shipbroker said, the rate on the Middle

East to China route, known as TD3C, has surged 39% since Friday

to $37,800, the highest since October.

Shipping rates for Russian oil shipments to China have also

jumped following the sanctions.

Freight rates for Aframax-sized tankers to ship ESPO blend

crude from Russia's Pacific port of Kozmino to North China more

than doubled on Monday to $3.5 million as shipowners requested

massive premiums due to limited tonnages available for that

route, S&P Global Commodity Insights data showed.

Adding to tightness, sanctioned tankers are stranded outside

China's eastern Shandong province, unable to discharge following

a ban imposed by Shandong Port Group before Washington's

announcement on Friday.

Tanker analytics firm Vortexa estimated that more than 85%

of Russian crude voyages into Shandong were conducted by the

newly-sanctioned tankers.

Analysts said tanker availability could tighten further as

traders look for unsanctioned vessels to ship Russian and

Iranian crude.

"We expect new ships will be pulled into the shadow fleet

over the coming months, many of which will be new to this trade,

tightening supply in the non-sanctioned freight market," Kpler

analysts said in a note.

The rate for VLCCs from the Middle East to Singapore has

gained the most, up worldscale (WS) 11.15 from Friday to

WS61.35, another shipbroker said. Worldscale is an industry tool

to calculate freight charges.

On the Middle East to China route, freight jumped to

WS59.70, up WS10.40, while the rate for VLCCs carrying West

African oil to China rose WS9.55 to WS61.44, the second

shipbroker said.

Shipping crude from the U.S. Gulf to China will now cost

$6.82 million per voyage, up $360,000 since last week, he said.