The cost of shipping Middle East crude oil to Asia, the world’s busiest route for supertankers, had this year’s biggest weekly advance on hire demand from Western countries. Charter rates for very large crude carriers, or VLCCs, on the industry’s benchmark Saudi Arabia-to-Japan voyage rose 11 percent this week to 49.8 Worldscale points, according to the Baltic Exchange in London. That was the largest gain since the week ended Dec 24. Rates climbed 0.8 percent today. “While China is on holiday, activity by Western charterers has been good, perhaps taking advantage of a less-crowded environment,” Dag Kilen, an analyst with RS Platou Markets AS in Oslo, said in an e-mailed note today. There’s “limited downside” to the market in the short-term, he said, citing brokers. Daily returns from the benchmark route climbed 8.2 percent to $9,280 today, rounding out a 37 percent weekly jump.
China’s weeklong break for the Lunar New Year started on Feb 2. The Organization of Petroleum Exporting Countries will raise crude shipments 1.7 percent through next month amid strong demand from Asia, according to tanker tracker Oil Movements. OPEC, whose members include Venezuela and Iran, accounts for about 40 percent of global oil supply. Loadings will rise to 24.1 million barrels a day in the four weeks to Feb 19 from 23.7 million barrels in the period to Jan 22, Oil Movements said yesterday in a report. 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 metric 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. Daily returns from suezmax tankers that haul 1 million barrel cargoes, half as much as VLCCs, jumped 42 percent to $11,534, according to the exchange. Returns from aframaxes that carry 650,000 barrels gained 36 percent to $1,819 a day.
Posted in: Middle East