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Arabian Gulf tanker rates likely to increase due to lack of vessels
The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may advance for a sixth day because vessel supply is constrained in the Atlantic.
- Bloomberg
- Published: 00:47 March 3, 2008
London: The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may advance for a sixth day because vessel supply is constrained in the Atlantic.
"In the Atlantic, there's no doubt there's a little shortage of ships on March dates," Mathieu Philippe a Dubai-based tanker broker at Barry Rogliano Salles said by phone yesterday. "The market will continue to rise until at least next week."
Options
When ship charter rates rise in western hemisphere markets, some owners whose tankers are in Eur-ope or the US may choose to compete for West African cargoes rather than sending the ships back to the Middle East, cutting availability.
PTT Pcl, Thailand's biggest energy company, hired the tanker Xin Jin Yang for 138 Worldscale points, according to Barry Rogliano. That's 1.5 per cent above the London-based Baltic Exchange's assessment of WS135.94 for a comparable voyage to Singapore.
Xin Jin Yang is fitted with a double hull to cut the risk of an oil spill. That makes it more expensive to hire than single-hulled ships. The exchange's benchmark assessment for freight derivative contracts advanced for a fifth day to WS132.66 yesterday.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes.
Flat rates for every voyage, quoted in US dollars a tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat-rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
At WS132.66, owners of double-hulled very large crude carriers, or VLCCs, can earn about $100,273 a day on a 39-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg marine-fuel prices.
Need
Frontline Ltd, the world's biggest VLCC operator, said on February 15 it needs $31,400 a day to break even on each of its supertankers.
Bookings for VLCCs sailing from the Middle East to Asia account for 47 per cent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP.
Shipments to the US and Caribbean, the second-biggest market, account for 14 per cent of demand for supertankers.
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