The cost of shipping Middle East crude to Asia fell to the lowest in more than a year as ship supplies accumulated and OPEC prepared to weigh up a new production cut. The Organization of Petroleum Exporting Countries will likely lower output before the end of the year, according to 18 of 21 analysts surveyed by Bloomberg. OPEC meets in Cairo on Nov. 29. Freight rates on the benchmark route from Saudi Arabia to Japan, as measured by the London-based Baltic Exchange, fell to the lowest since Nov. 13, 2007.
“With more than ample supply of vessels including a steady stream of newbuildings,” the chances of reversing the decline “appear slim for the moment,” Oslo-based shipbrokers Fearnleys AS said in a report today.
The benchmark rate fell for a third today, by 1.6 percent to 64.22 Worldscale points.
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.
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.
“With more than ample supply of vessels including a steady stream of newbuildings,” the chances of reversing the decline “appear slim for the moment,” Oslo-based shipbrokers Fearnleys AS said in a report today.
The benchmark rate fell for a third today, by 1.6 percent to 64.22 Worldscale points.
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.
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.
