Soaring oil trading in US Gulf dries up as tanker rates skyrocket.

Soaring oil-tanker costs are drying up activity in the US export market as sellers are slow to lower offers and buyers are skittish, according to market participants. Some sellers have held back from offering cargoes, while others have yet to reduce their offers enough to accommodate the rising cost of shipping oil, according to 10 market participants.

Buyers are holding out for deeper discounts after sanctions on units of China's COSCO Shipping Corp. took away tankers from the global shipping pool, they said. As a result, hardly any deals have been...