VLCC owners run up heavy losses
Latest VLCC fixtures from the Arabian Gulf (AG) show that owners still sustain heavy losses in the spot market. Front Commander was fixed today from Basrah for US Gulf with 10 October laycan at WS 40, which is no better than around USD 15,000 per day. According to Frontline Management the vessel has a breakeven of USD 30,000 per day. It is known that OPEC members have initiated production increases of more than 1.0 million barrels per day, principally in an effort to reduce oil prices, but OPEC production has a real impact on VLCC demand. OPEC output this year, before the latest 500,000 barrels per day official increase, has been 1.6 million barrels per day lower than last year. This in itself made between 35 and 40 VLCC redundant. Last week there were 22/23 fixtures from the Middle East and the oversupply of VLCC tonnage was up. Around 20 VLCC fixtures per week are not enough to firm rates. Only 63 units are expected to load during the next month.