Spot rates in the Middle East Gulf have increased dramatically on Thursday and Friday after two tankers were attacked in the Gulf of Oman. However, there has been only limited activity since then, as most owners avoid fixing before the picture is clear.
They still await new insurance quotes. Meanwhile, July contract rate has been pushed close to 25, USD per day, as supply is expected to tighten over the next couple of weeks, with most ballasters now heading to other exporting regions, such as West Africa.
Tanker Charter Rates News
The increase is partially driven by expectations of higher insurance costs, together with the anticipated increase of bunker fuel prices in the region.
Over the next couple of weeks, vessel availability near the Middle East Gulf is set to drop, since several owners will consider targeting other loading areas to avoid the risk of another attack against oil tankers. The tightening up of supply could then push spot rates in the region much higher, closer to levels last seen in Q1. Some Greek owners proved to be ready to take up the risk and fix some of their ships to quickly get the advantage of the spike, while most other owners simply wait to see what could follow.
Some of the major names in the market, such as Sovcomflot, Trafigura and DHT Holdings have already suspended any activity in the region last week. If the tension between the US and Iran escalates further, then the reaction could turn much more drastic, with spot rates in the Middle East Gulf to secure more support in case of more disruptions in local oil flows. Major oil importers will then prioritize to urgently stockpile to avoid outages and upcoming price spikes.
With a plethora of ships of different types getting blockaded within the Gulf, more time will be required to securely exit or enter the region, which will allow owners to demand a premium to approach the loading areas. Source: Maritime Intelligence Network. For as long as Iran does not get directly attacked, any major disruption is not considered very probable. The market looks to be rather well balanced so far, especially as demand is muted due to refineries in maintenance across Asia.
Meanwhile, oil stocks have been hitting record highs for this year across many importing countries. But in any different case, if the US and its allies decide to target Iran directly, massive disruptions could be observed in a short time. Oil trade flows through the Strait of Hormuz would then fall sharply, with a spike to follow both in oil prices and tanker rates, as none of the other regions could step in to fill the gap and add up to Crude oil liftings from the Middle East Gulf already reached rather low levels during last week, the lowest for this year excluding the limited activity during the Christmas week.
However, activity is expected to return back to normal levels quickly this week. Related Posts Floating Storage: How much of the oil supply surplus can be stored by tankers? Follow Us. Apr Filter Sort.There is still a lot of activity, but cargoes seem to have marginally decreased month-on-month in parallel to an easy ongoing vessel availability.
More than half of the February programme is already covered, which has added more pressure in the Middle East Gulf during the last couple of weeks. The only positive aspect is that recent performance makes owners more resistant to any further downside, with the first signs of stability being there to observe since mid-January.
VLCC ends week with skyrocket spot rates on ‘dramatic fixing’
This could quickly improve the sentiment as we approach next month, while the period market is still looking rather optimistic. But for now, spot rates are expected to remain under significant pressure by the end of this week.
We expect at least 35 more Middle East Gulf MEG fixtures to get finalised for February, but there is concern as there are more than 85 units still available in the spot market. In the East, charterers have been fixing to China below wordscale WS 55, with rates recently moving further down. Ballasters moving away could have an impact next week. Optimism has been found once again on the other side of the Atlantic, with stronger demand expected to allow the market to gain some momentum.
A great amount of available tonnage has been absorbed by the higher expectations for the US loadings so far. Rates for vessels heading to Singapore moved further up to USD 6.
But as the region starts looking more crowded, there is concern that levels might not be supported since older units are willing to move down to USD 4. Demand should remain rather healthy, at least in the short term.
VLCC fixtures in the North Sea were only limited as expected, with only occasional activity observed. Rates were pushed lower to USD 6. As the Chinese New Year approaches, owners tend to expect heavier fixing activity just before the holiday pause, with ballasting alternatives still popular but not attractive as before.
Related Posts Floating Storage: How much of the oil supply surplus can be stored by tankers? Follow Us.
Apr Filter Sort.After the Saudis lifted subjects on nearly all their VLCC in-charters last week, there seemed to be an activity vacuum, with only a few other fixtures being concluded, whilst charterers waited for the natural gravity effect of sentiment driven rises.
The Middle East market was static over the course of the last week, with rates for ,mt to China holding at WS Despite the concerns and uncertainties linked to the Coronavirus outbreak, the Middle East market made some slight gains as cargoes in the first half of March had fewer competing owners. The market in the Middle East was again static, with the uncertainties caused by the ongoing effect of Coronavirus.ASIAN PROGRESS V OILTANKER SHIP VLCC タンカー
The market in the Middle East was unmoved this week, with Chinese refiners continuing to slow imports, allied with the impact of the Coronavirus and the return of the previously sanctioned Cosco tonnage. The market in the Middle East dropped further this week, with the deepening impact of the coronavirus outbreak on oil demand from China keeping activity low.
The market in the Middle East tumbled this week, with most of the blame laying with the Chinese New Year holiday and the outbreak of the Coronavirus.
A quieter week in the Middle East, alongside falling bunker prices has left owners unable to maintain rate levels. Escalating tensions between the USA and Iran, in addition to a continuing strong market, made for an interesting week, with rates firming 2. The introduction of the new higher Worldscale WS flat rates saw rates adjust downwards, accordingly with the market.
Middle East Gulf rates came under persistent downward pressure early on, although by the end of the week, owners were pushing back. Skip to primary navigation Skip to main content Skip to primary sidebar. Read more Read More. VLCC After the Saudis lifted subjects on nearly all their VLCC in-charters last week, there seemed to be an activity vacuum, with only a few other fixtures being concluded, whilst charterers waited for the natural gravity effect of sentiment driven rises.
VLCC Despite the concerns and uncertainties linked to the Coronavirus outbreak, the Middle East market made some slight gains as cargoes in the first half of March had fewer competing owners. VLCC The market in the Middle East was unmoved this week, with Chinese refiners continuing to slow imports, allied with the impact of the Coronavirus and the return of the previously sanctioned Cosco tonnage. VLCC The market in the Middle East dropped further this week, with the deepening impact of the coronavirus outbreak on oil demand from China keeping activity low.
VLCC A quieter week in the Middle East, alongside falling bunker prices has left owners unable to maintain rate levels. VLCC Middle East Gulf rates came under persistent downward pressure early on, although by the end of the week, owners were pushing back.This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.
Registered in England and Wales. Number Lee Hong Liang Oct 14, The rise in tanker rates started after the attack on the Saudi oil processing facilities in Abqaiq in mid-September and accelerated when the Trump administration sanctioned a number of Chinese tanker companies, including Cosco Dalian on 25 September. First of all, after several years of dismal earnings, the tanker market was starting to become more balanced.
In addition, sanctions on Iran and Venezuela have reduced spare production capacity and increased geopolitical uncertainty. On top of that, both the refining and the tanker industry have started to prepare for IMO bunker fuel regulations with refiners running flat out on producing compliant fuels and a portion of tanker owners scheduling drydocks to install scrubbers, tightening vessel capacity.
Furthermore, a quick succession of unrelated and unpredicted incidents has pushed the market up. Ecuador also recently declared force majeure on the majority of its crude oil exports as domestic unrest escalated.
VLCC Spot Market
However, the major impact of IMO is still coming and there is no significant new shipping capacity in the pipeline. We expect that the market will remain robust, albeit volatile. All rights reserved. Seatrade Maritime Awards Asia. Load More.But the move seems a little odd, given that oil prices have been in decline over that time.
Despite oil price movements, there is reason for traders to be bullish on tanker stocks right now. But those bullish indicators could take a turn for the worse very quickly. Geopolitical risk in the energy industry is pushing dayrates higher across the industry. Not only is the attack on Saudi Arabia's oil supply leading to fears that more oil will need to be shipped around the world over the next few months, but the Trump administration is also putting sanctions on foreign suppliers to the industry.
If spot prices for tankers stay high for an extended time, it will lead to higher revenue and profit for tankers, but the immediate impact will be muted. If high rates last in the tanker market, they will eventually flow through to tanker owners' bottom line.
But there's one big reason to stay away from all of the tanker stocks right now. A year view shows that tanker stocks aren't good at generating long-term value for shareholders. TNK data by YCharts. There are a number of reasons for this underperformance, but the biggest is that companies have very little durable advantage.
Any competitor can add capacity to meet the market's need, and there's even the risk of being replaced by pipelines being built around the world. One of the reasons rates were so low in -- which had Teekay, Nordic American, Frontline, and Scorpio Tankers all reporting losses -- was an oversupply in the tanker market.
If high rates continue, they'll begin expanding again, and that'll push rates lower. Windfalls are short lived in the tanker industry, and I don't see any reason that won't be the case this time around. Oct 6, at PM. Author Bio Travis Hoium has been writing for fool. Follow TravisHoium. Image source: Getty Images. Stock Advisor launched in February of Join Stock Advisor.
Related Articles.This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Registered in England and Wales. Number Lee Hong Liang Mar 16, Bahri is one of the largest VLCC owners in the world but it rarely enters the spot market to charter third party tonnage. Related: An awful energy day…unless you are a tanker owner. In addition to the sheer number of fixtures, the intended destination of the vessels saw none headed to eastern destinations, a clear sign that the Saudis are targeting western clients.
In total, last week saw 92 fixtures, up from 56 fixtures in the previous week.
The average number of VLCC fixtures per week for year-to-date is about 50, which is similar to the weekly averages in recent years. But all these could change if Saudi Arabia and Russia come to a compromise over production levels and various governmental measures prove successful against the coronavirus. All rights reserved. Hide comments. More information about text formats. Text format Comments Plain text.
Web page addresses and e-mail addresses turn into links automatically. Lines and paragraphs break automatically. Seatrade Maritime Awards Asia. Pin Oak Corpus Christi loads first vessel at new tanker berth. Load More.Who can forget September ? September was also important to shipping for another reason: It was the last time rates for very large crude carriers VLCCs, vessels with capacity to carry 2 million barrels of crude oil were as lofty as they are today.
The ascent of VLCC rates over recent days has been so steep that the sector has actually clawed its way back to pre-Lehman levels. Activity out of the U. Gulf is flourishing. More recently, a sixth driver has emerged to further juice returns for tanker owners: a reported decision by ExxonMobil and potentially other charterers to cease employing any tanker that has called in Venezuela over the past year. Such moves slash available tonnage even more, yet another tailwind for rates.
Another week, another downward step for container-shipping rates. The price to ship a foot-equivalent-unit FEU container is tracked daily by Freightos.
Carriers will attempt rate hikes for the second half of October and this should result in an upward rate movement next week. VLCC rates are escalating by the day.
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Thomas, where he rose to editor-in-chief of the Virgin Islands Business Journal. He then spent 15 years at the shipping magazine Fairplay in various senior roles, including managing editor. He is currently sheltering in place in Manhattan with his wife and two Shi Tzus. Related Articles.
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