Font Size

- Aa +

Tue 16 Nov 2010 05:08 PM

Font Size

- Aa +

Persian Gulf tanker excess expands as Nov cargoes concluded

Excess is potentially hindering owners’ ability to secure better freight rates

Persian Gulf tanker excess expands as Nov cargoes concluded
BIGGEST RETREAT: Income from Middle East crude is set to fall because of a surplus of ships

A surplus of supertankers competing for two million-barrel cargoes of Middle East crude oil expanded as this month’s bookings were concluded, potentially hindering owners’ ability to secure better freight rates.

There are 9.5 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 six shipbrokers and two owners surveyed by Bloomberg News on Tuesday. A week ago, the excess stood at seven percent.

November’s loading program is “more or less completed” with booking levels about the same as the “historical average,” DnB NOR Markets analysts Henrik With and Glenn Lodden said in an emailed report today.

There is an “overhang” of ships for hire for the first 10 days of December, they said.

The surplus has averaged 16 percent so far this quarter, down from 20 percent during a third quarter in which returns from the industry’s benchmark Saudi Arabia-to-Japan route stayed unprofitable. This quarter, rental income returned to profit.

The highest daily rental income from the Saudi Arabia-to-Japan route in the third quarter was $29,274 a day on July 1, according to the London-based Baltic Exchange.

Frontline Ltd, the biggest operator, said in August  27 it required $30,900 a day to break even on the vessels.

Returns advanced to $42,517 a day on November 2 and were assessed at $19,786 a day yesterday, according to the Baltic Exchange. Frontline states its breakeven figure each quarter and is next due to report earnings on November 24.

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.