What is the core dispute between Mercuria and the Baltic Exchange, and what benchmark rate is at the center of it?

Mercuria Energy Group Ltd. is suing the Baltic Exchange, alleging it suffered hundreds of millions of dollars in losses due to distortions in the TD3C benchmark rate — a daily index for hiring tankers to ship oil from the Middle East to China, historically calculated using shipping costs from Ras Tanura port in Saudi Arabia (which requires transit through the Strait of Hormuz). The dispute centers on the Baltic Exchange’s March decision to continue calculating TD3C based on Ras Tanura despite near-zero actual shipments through the strait, causing the rate to surge to $600,000/day from its typical $40,000–$100,000 range.

Why did the TD3C rate spike so dramatically, and what real-world impact did that have on contracts?

The TD3C rate spiked because the Baltic Exchange maintained its methodology — basing the rate on Ras Tanura — even though traffic through the Strait of Hormuz had 'essentially ceased' and remaining shipments required 'payment of illegal tolls to sanctioned entities', making the underlying data non-representative. This artificial inflation caused contractual and derivatives turmoil: for example, Mercuria refused to pay Hunter Group ASA the full charter rate pegged to TD3C, resulting in Hunter receiving $8.3 million less than owed for March charters.

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