As set out in Gulf tanker rates may jump on Asia, Atlantic demand :
The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may jump amid rising demand for West African consignments that could increase average voyage lengths and cut supply.
Crude oil shipments between West Africa and Asia will climb 46 per cent to 1.2 million barrels per day (bpd) in July from June, Vienna-based energy consultant JBC GmbH said in a note. US and European refineries may buy extra cargoes to replenish depleted crude stocks, Morgan Stanley analysts said on Monday. The further ships travel, the fewer there are for hire.
'The market could be perfectly primed for a big rally,' Per Mansson, managing director of Nor Ocean Stockholm AB, a shipbroker, said in an e-mailed note on Wednesday. 'Should Asia buy all these extra West African barrels, and if Atlantic refineries really do need a big restock, then demand could be phenomenal at a time when there are ship-supply issues.'
Iran had 15 supertankers idling in the Persian Gulf on Monday, storing oil while Asian refineries underwent repairs. Those carriers will take about a month to six weeks to deliver cargoes and get back to the Middle East, making them unavailable for hire. Vessel demand is greatest for double-hull tankers that cut the risk of an oil spill, Mr Mansson said.
Owners of double-hulled very large crude carriers, or VLCCs, are making 200.19 Worldscale points on the voyage to Asia, according to the exchange. Rates have climbed for the past eight trading days.
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 tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
At 200.19 Worldscale points, owners of VLCCs can earn about US$161,209 a day on a 39-day round trip from Saudi Arabia to South Korea, based on a formula by RS Platou, an Oslo-based shipbroker, and Bloomberg marine fuel prices.
Frontline Ltd, the world's biggest VLCC operator, said on Feb 15 it needs US$31,400 a day to break even on each of its supertankers.