Gulf tanker rates may rise from highest since 2004

LONDON — The cost of shipping 2 million- barrels of oil on supertankers from the Middle East to Asia may extend gains from a three-year high because of dwindling supplies of ships available for hire in January.

By (Bloomberg)

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Published: Sat 15 Dec 2007, 9:05 AM

Last updated: Sat 4 Apr 2015, 9:39 PM

“For some of the owners, it seems the sky is the limit,” said Mathieu Philipe, a broker at Paris-based Barry Rogliano Salles. “Given the shortage of tonnage in the next 30 days, we’re likely to see even higher numbers being paid.”

Freight rates for supertankers have almost quadrupled in the past month. Some carriers are being converted to haul iron ore and coal after transport costs for such commodities rose to a record in November. An oil spill caused by a tanker collision off South Korea last week increased demand for vessels that are less prone to leaking their cargoes.

There were no new bookings for so-called very large crude carriers, or VLCCs, on the benchmark routes to Japan or Singapore, shipbrokers including Barry Rogliano said in notes to clients yesterday.

Freight rates were on Thursday at Worldscale 235 to Japan, the highest since Dec. 14, 2004, according to the London-based Baltic Exchange.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates, quoted in U.S. dollars a metric ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

There was speculation that an Asian oil refiner had booked a vessel at W275, according to Per Mansson, a shipbroker at Nor Ocean Stockholm AB.

Crude progress

“I wouldn’t be surprised if it’s true,” he said. “Owners have a lot of confidence at the moment.”

VLCC rates to the U.S. were little changed. Exxon Mobil Corp. booked a ship called the Crude Progress at W170, according to shipbrokers reports. Rates were at W172.69 yesterday, according to the Baltic Exchange.

VLCCs are booked about a month in advance and charterers have about 24 hours to cancel contracts.

Shipping rates for hauling so-called dry-bulk commodities rose to its highest ever last month as port congestion and increased imports of coal and ore to China strained the global fleet of vessels. Shipowners had converted about 15 VLCCs to carry such cargoes to profit from the higher rates, reducing supplies in the tanker market, Mansson said.

An oil tanker called the Hebei Spirit, fitted with one layer of steel separating its cargo from the ocean, caused the world’s worst oil spill for 4 1/2 years after it was struck on Dec. 7 by a crane on a barge off the coast of South Korea. On the same day, Samco Europe, a double-hulled carrier controlled by Total SA, spilt no oil after colliding with a container ship in the Gulf of Aden.

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