Middle East tanker rates could drop as vessel supply increases
( Gulf ) - The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may drop for a 17th day as the supply of carriers accumulates and oil companies cut cargo demand.
Refineries ordering crude cargoes may be assuming a US recession will crimp fuel demand, and the volume of oil being ship-ped "looks less," than in December, Per Mansson, a tanker broker at Nor Ocean Stockholm AB said in an e-mailed note.
"All markets are coloured by the world economy in general and the US in particular," Mansson said. Rental rates may slide until the largest owners refuse to take lower hire prices, he said.
ExxonMobil Corp, the world's biggest oil company, hired the tanker Astro Lupus at a rate of 67.5 Worldscale points for a cargo to Japan, according to a report from Oslo-based shipbroker PF Bassoe AS. That's 44 per cent below the London-based Baltic Exchange's 120.94-point benchmark for voyages to Asia.
Astro Lupus probably cost less than the benchmark because it was built in 1989 and is fitted with one steel hull. The exchange assessment is for ships that are up to 15 years old and have either a double or a single hull.
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 ton, 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 120.94 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $90,761 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.
Frontline Ltd., the world's biggest VLCC operator, said November 15 it needs $30,000 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.