Oil supertanker prices soar as Middle East cargoes soar Ship’s crew

(Bloomberg) –

Revenues from the giant crude oil supertankers posted the second-biggest daily gain in three years as cargoes from the Middle East, the top export region, surged.

The rise in tariffs and charges comes as a surprise given that several producer countries, including Saudi Arabia, the United Arab Emirates and Kuwait, had previously committed to cutting output. That doesn’t stop them from selling aged casks.

Tariffs for ships transporting two million barrels of crude oil from the region to China rose by nearly $20,000 a day on Monday, according to the Baltic Exchange. That’s only the second time since 2020 that they’ve made such a big move.

The additional loads not only surprised traders but also reinforced several other bullish forces. A monsoon in India has caused disruptions at the country’s main oil port, potentially preventing ships from returning to the Persian Gulf as expected. Meanwhile, strong export demand from the US and Brazil in recent months has also limited the number of supertankers available in the Middle East.

Earlier this week, South Korea’s SK Innovation Co. tentatively hired the Very Large Crude Carrier Melody Hope to ship world-scale 71 crude from the Persian Gulf in late June. Taiwan’s Formosa Petrochemical Corp. stationed the supertanker Nave Quasar to load its Middle East cargoes WS 46 last week.

Worldscale is an industry standard that reflects a percentage of an underlying flat rate for a given route, set for the year.

“According to brokers, the increase is due to a surge in Middle East cargoes for cargo in late June, combined with a limited number of vessels available,” analysts at Clarksons Securities AS, including Frode Morkedal, wrote in a report. “While it remains to be seen how long the uptrend will last given the expected lower volumes in July, the price increase shows how tight the VLCC market is and is helping to clarify the tonnage list in the region.”

Saudi Arabia has pledged an additional unilateral production cut of 1 million barrels a day from July.

According to Halvor Ellefsen, a tanker broker at Fearnleys in London, the number of Middle East cargoes booked this month has risen to more than 150, the highest level this year.

The cargoes concerned are spot charter and not cargoes organized under longer-term transport contracts.

© 2023 Bloomberg LP

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