Over the next 30 days there are 18 percent more crude carriers for hire than there are cargoes
A surplus of supertankers competing to load 2 million barrel cargoes of Middle East crude oil expanded for a second week, weighing on vessel owners’ efforts to raise charter rates.
There are 18 percent more very large crude carriers, or VLCCs, for hire over the next 30 days than there are cargoes, according to the median estimate of seven shipbrokers and owners surveyed by Bloomberg News on Tuesday. A week ago the excess was 15 percent.
Charter rates for VLCCs on the industry’s benchmark Saudi Arabia to Japan route slid 1.8 percent on Tuesday to 47.7 Worldscale points, according to the London-based Baltic Exchange. Daily rental income from the voyage declined 9.3 percent to $12,255, extending this month’s retreat to 53 percent.
Frontline Ltd, the world’s biggest supertanker operator, needs $31,300 a day to break even on the vessels once finance costs are taken into account. Crew, running costs and other daily operating expenses are $12,777.
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.
The Baltic Dirty Tanker Index, a wider measure of crude oil transportation costs, slid 2.6 percent to 743 points, according to the Baltic Exchange.For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.