Persian Gulf tanker rates may drop as owners await August cargo
The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may drop for a fifth day on an extended lull in demand before August cargoes. Oil companies have yet to start hiring most of the tankers for the cargoes due to load next month, reports from Optima Shipbrokers in Athens showed. There are about 105 bookings a month. Demand should start to rise in the next several days as refineries arrange shipping three weeks to a month in advance. The market is somewhat nervous'' because of a lack of demand, Per Mansson, managing director of shipbroker Nor Ocean Stockholm AB, said in an e-mailed note yesterday. Once August starts, it'll change.''
Total SA, Europe's third-largest oil company, hired Seaking for 235 Worldscale points, according to an Optima report today. That's 0.4 percent above the London-based Baltic Exchange's benchmark assessment of 234.06 points for a cargo to Asia.
The rental of Seaking also includes options to direct the tanker to Europe, either through the Egypt's Suez Canal or on a longer voyage around South Africa's Cape of Good Hope. Usually, the more discharge options a tanker rental has, the more the vessel costs to hire, because it increases uncertainty for the owner and can be valuable for the oil company using the ship.
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 U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Hire Rates
Each flat-rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
At 234.06 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $191,342 a day on a 39-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg marine-fuel prices.
Frontline Ltd., the world's biggest VLCC operator, said May 22 it needs $31,500 a day to break even on each of its supertankers.
Total SA, Europe's third-largest oil company, hired Seaking for 235 Worldscale points, according to an Optima report today. That's 0.4 percent above the London-based Baltic Exchange's benchmark assessment of 234.06 points for a cargo to Asia.
The rental of Seaking also includes options to direct the tanker to Europe, either through the Egypt's Suez Canal or on a longer voyage around South Africa's Cape of Good Hope. Usually, the more discharge options a tanker rental has, the more the vessel costs to hire, because it increases uncertainty for the owner and can be valuable for the oil company using the ship.
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 U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Hire Rates
Each flat-rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
At 234.06 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $191,342 a day on a 39-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg marine-fuel prices.
Frontline Ltd., the world's biggest VLCC operator, said May 22 it needs $31,500 a day to break even on each of its supertankers.