Oil shipping rates continued their rise amid expectations of tightening global tanker supplies due to broader US sanctions on the Russian fleet and trader demand for ships loaded with Middle Eastern oil bound for Asia, industry sources said on Wednesday.
On Tuesday, Shell ordered three Very Large Crude Carriers, capable of carrying up to 2 million barrels of oil, at Worldscale 70 speeds to load Middle Eastern crude in early February and Chinese refiner Shenghong Petrochemical. , booked two VLCCs for the same loading period at the same rate, a shipbroker said.
Worldscale is an industrial tool for calculating shipping costs.
In comparison, China’s Unipec previously ordered two VLCCs for late January loading from the Middle East at WS51-52.25.
Traders are expected to look for more tankers to load crude from Saudi Arabia in February, which could push freight rates higher, the shipbroker said.
Strong demand pushed VLCC prices on the Middle East to China route, known as TD3C, higher to WS70.45 on Wednesday, up WS10.75 from the previous day, according to two shipbrokers and a trader.
This equates to a 15% increase, bringing the cost of renting a supertanker on the route to $4.1 million, a second shipbroker said.
Supertanker fares on other routes have also seen similar increases, he added.
VLCC fares from the Middle East to Singapore rose WS10.45 to WS71.80, while West Africa to China fares rose WS9.23 to WS70.67, he said.
Oil prices rose slightly, but uncertainty over the impact of sanctions limited gains
Shipping crude oil from the US Gulf to China will now cost $8.715 million per voyage, up $1.895 million from Tuesday, he added.
Rising freight costs and spot prices for Middle Eastern crude are putting pressure on refining companies’ margins in Asia.
Complex refining margins in Singapore, a bellwether for the region, slipped to $1.15 a barrel, from $4.69 on Jan. 9, before the sanctions were announced, according to LSEG data.
Source: Reuters
