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Mideast tanker rates could rise on Chinese demand

The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may rebound this week as Chinese oil companies return to the market after the Lunar New Year to hire vessels for loading in March.

  • Bloomberg
  • Published: 00:21 February 11, 2008
  • Gulf News

Oslo: The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may rebound this week as Chinese oil companies return to the market after the Lunar New Year to hire vessels for loading in March.

The holiday in Asia curtailed demand last week from China and South Korea, the second- and third-largest purchasers of crude oil cargoes in the region, after Japan. The cost of hiring very large crude carriers, or VLCCs, fell 10 per cent.

Prices may rise once Asian shippers return because of the limited supply for March of double-hull VLCCs, which lower the risk of oil spills in the event of an accident, Per Mansson, a tanker broker at Nor Ocean Stockholm AB, said.

There were no new tanker bookings reported Friday by shipbrokers. The London-based Baltic Exchange's benchmark assessment for voyages to Asia slipped 2.3 per cent to 112.31 Worldscale points Friday, its fourth daily drop.

Rates may rise to about 130 Worldscale points once oil companies begin seeking ships for March cargoes, Mansson said.

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.

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