The supply of supertankers competing to haul two million-barrel cargoes of Middle East crude oil has expanded, pressuring owners as charter rates crash.
There are 25 per cent more very large crude carriers, or VLCCs, for hire in the Persian Gulf over the next 30 days than there are cargoes, according to the median estimate of five owners and brokers surveyed by Bloomberg News on Tuesday. A week ago, the excess was 15 per cent.
Rental income from shipping Saudi Arabian crude oil to Japan has declined for the past 19 trading sessions, plunging 84 per cent to US$11,850 a day over that period, according to the London-based Baltic Exchange.
Frontline Ltd, the biggest supertanker operator, said on May 21 that it requires US$31,100 a day to make a profit on the vessels.
The Saudi Arabia-to-Japan route is used by traders to settle contracts called forward freight agreements, or FFAs. The accords allow companies to bet on, or hedge, the future cost of shipping oil.
An expansion in the tanker fleet means rising oil demand is not translating into higher charter rates for the vessels, the International Energy Agency said in a report on Tuesday.
The crude oil tanker fleet expanded by a net 6.7 per cent last year, the IEA said, citing estimates from shipbroker Simpson, Spence & Young Ltd. It did not say what net growth will be in 2010.
Ships with a carrying capacity of 35.8 million deadweight tons will enter service this year, up from 31.3 million tons last year, it said.
Frontline's break-even figure of US$31,100 is the amount it needs to pay debts, crew and other daily running costs. The company operates vessels on various trade routes that may be more profitable than Saudi Arabia to Japan and has ships leased on longer- term rentals.
Daily running costs, excluding fuel, for two million-barrel carrying supertankers are US$11,601, according to London-based Drewry Shipping Consultants Ltd.
The Baltic Exchange's rental income figure of US$11,850 is also the amount it estimates owners receive after fuel has been paid.
Global ship fuel prices advanced 2.5 per cent last week to US$435.18 a day, according to data compiled by Bloomberg from 25 ports around the world.
The Baltic Dirty Tanker Index, a measure of tanker charter rates on 17 voyages, retreated for a 15th straight session, losing 1.1 per cent to 780 points.
There are 25 per cent more very large crude carriers, or VLCCs, for hire in the Persian Gulf over the next 30 days than there are cargoes, according to the median estimate of five owners and brokers surveyed by Bloomberg News on Tuesday. A week ago, the excess was 15 per cent.
Rental income from shipping Saudi Arabian crude oil to Japan has declined for the past 19 trading sessions, plunging 84 per cent to US$11,850 a day over that period, according to the London-based Baltic Exchange.
Frontline Ltd, the biggest supertanker operator, said on May 21 that it requires US$31,100 a day to make a profit on the vessels.
The Saudi Arabia-to-Japan route is used by traders to settle contracts called forward freight agreements, or FFAs. The accords allow companies to bet on, or hedge, the future cost of shipping oil.
An expansion in the tanker fleet means rising oil demand is not translating into higher charter rates for the vessels, the International Energy Agency said in a report on Tuesday.
The crude oil tanker fleet expanded by a net 6.7 per cent last year, the IEA said, citing estimates from shipbroker Simpson, Spence & Young Ltd. It did not say what net growth will be in 2010.
Ships with a carrying capacity of 35.8 million deadweight tons will enter service this year, up from 31.3 million tons last year, it said.
Frontline's break-even figure of US$31,100 is the amount it needs to pay debts, crew and other daily running costs. The company operates vessels on various trade routes that may be more profitable than Saudi Arabia to Japan and has ships leased on longer- term rentals.
Daily running costs, excluding fuel, for two million-barrel carrying supertankers are US$11,601, according to London-based Drewry Shipping Consultants Ltd.
The Baltic Exchange's rental income figure of US$11,850 is also the amount it estimates owners receive after fuel has been paid.
Global ship fuel prices advanced 2.5 per cent last week to US$435.18 a day, according to data compiled by Bloomberg from 25 ports around the world.
The Baltic Dirty Tanker Index, a measure of tanker charter rates on 17 voyages, retreated for a 15th straight session, losing 1.1 per cent to 780 points.