Persian Gulf Tanker Rates May Climb

Persian Gulf Tanker Rates May Climb as OPEC Boosts Crude Output
By Alaric Nightingale
Sept. 12 (Bloomberg

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may rise as OPEC boosts output by 500,000 barrels a day, increasing the number of cargoes.

``This is positive for tanker owners,'' London-based shipbroker Galbraith's Ltd. said in an e-mailed note today, adding that extra cargoes could ``creep'' into the market in October. OPEC members have ``historically'' pre-empted the official start of output increases, which is due to be November.

Shipping lines including Frontline Ltd., the world's biggest operator of very large crude carriers, or VLCCs, need more exports from Organization of Petroleum Exporting Countries to reverse losses from day-to-day rentals and eliminate a glut of vessels competing for cargoes.

Hyundai Merchant Marine Co., a South Korean shipping line, hired the VLCC BW Noto at a rate of 50 Worldscale points, according to a report today by Paris-based shipbroker Barry Rogliano Salles.

That's 3 percent below the London-based Baltic Exchange's benchmark assessment of 51.63 points for shipments to Asia, which has fallen for the past 11 days.

BW Noto is likely to cost less than the benchmark because it's fitted with one hull separating its cargo from the ocean. The exchange's rate also reflects rentals of two-hulled tankers that cut the risk of an oil spill and normally cost more to hire.

Bunker Prices

At 51.63 Worldscale points, owners of double hulled VLCCs, can earn about $18,620 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline Ltd., the world's biggest VLCC operator, said Aug. 22 it needs $30,000 a day to break even on each of its supertankers.

There are probably about 16 outstanding bookings to be made in September and 104 in October, based on average monthly loadings from Middle East ports this year, according to a report today from Barry Rogliano Salles. One hundred and eight VLCCs will be available for hire in the region by Oct. 12.

Bookings for VLCCs sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP. Shipments to the U.S. and Caribbean, the second-biggest market, account for 14 percent of demand for supertankers.

Persian Gulf Tanker Rates May Rise, Capital Shipbrokers Says
By Alaric Nightingale
Sept. 11 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may rise as demand for the raw material increases before winter in the northern hemisphere, according to Capital Shipbrokers LP.

``Heating oil production reduces inventory,'' Tim Coffin, head of research for the London-based company said in an e-mailed note published today. Refinery demand will lead to an ``autumn bounce'' in the cost of renting ships, he said.

Rental rates have declined 22 percent since Aug. 24 because of a glut of tankers.

China International United Petroleum & Chemical Corp., or Unipec, hired the tanker La Madrina at 55 Worldscale points, a measure of the cost of renting ships, according to a report today from Athens-based Optima Shipbrokers.

The rate is 6.5 percent above the London-based Baltic Exchange's benchmark assessment of 51.66 points for a similar voyage. La Madrina is fitted with two steel hulls separating its cargo from the ocean and the exchange benchmark includes single- hull tankers that are cheaper to rent.

At 51.66 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $18,653 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Bookings for VLCCs sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP.

Shipments to the U.S. and Caribbean, the second-biggest market, account for 14 percent of demand for supertankers.