Cost of shipping oil to US to rise on Bush plan to double the size of the country's reserves
The cost of transporting crude oil to the US may keep rising if President George W Bush's plan to double the size of the country's reserves is approved by Congress, Poten & Partners Inc said.
In his annual State of the Union address on Jan 23, Mr Bush proposed doubling the Strategic Petroleum Reserve, or SPR, to 1.5 billion barrels by 2027. Under the plan, the US will buy 100,000 barrels a day from the second quarter, or 800 million barrels over the 20-year period.
'US import demand could increase by 110,000 barrels per day at a time when supply of tankers of all sizes remains tight relative to demand,' New York-based Poten said in the Jan. 26 report. 'Even a small increase in crude cargoes headed to the US should push ton-mile demand higher.'
The Caribbean region, which includes Venezuela, would supply about 30 per cent of the extra shipments, or a further 32,900 barrels a day, Poten estimated. The Persian Gulf would provide about 22 per cent, or another 24,175 barrels a day, and West Africa 18 per cent, or an additional 20,107 barrels a day.
The increase would require a further nine trips a year to the US by Very Large Crude Carriers, or VLCCs, able to carry 2 million barrels of oil, five trips by suezmax tankers, which can ship one million barrels, and 10 by aframax ships, which can transport 80,000-ton cargoes of oil.
Freight rates for suezmaxes headed to the US Atlantic Coast from West Africa were assessed at 131.9 Worldscale points on Jan 25 by London's Baltic Exchange, compared with WS 107.1 on Jan 19. Rates may continue to rise as colder US weather prompts refiners to process more crude.
In his annual State of the Union address on Jan 23, Mr Bush proposed doubling the Strategic Petroleum Reserve, or SPR, to 1.5 billion barrels by 2027. Under the plan, the US will buy 100,000 barrels a day from the second quarter, or 800 million barrels over the 20-year period.
'US import demand could increase by 110,000 barrels per day at a time when supply of tankers of all sizes remains tight relative to demand,' New York-based Poten said in the Jan. 26 report. 'Even a small increase in crude cargoes headed to the US should push ton-mile demand higher.'
The Caribbean region, which includes Venezuela, would supply about 30 per cent of the extra shipments, or a further 32,900 barrels a day, Poten estimated. The Persian Gulf would provide about 22 per cent, or another 24,175 barrels a day, and West Africa 18 per cent, or an additional 20,107 barrels a day.
The increase would require a further nine trips a year to the US by Very Large Crude Carriers, or VLCCs, able to carry 2 million barrels of oil, five trips by suezmax tankers, which can ship one million barrels, and 10 by aframax ships, which can transport 80,000-ton cargoes of oil.
Freight rates for suezmaxes headed to the US Atlantic Coast from West Africa were assessed at 131.9 Worldscale points on Jan 25 by London's Baltic Exchange, compared with WS 107.1 on Jan 19. Rates may continue to rise as colder US weather prompts refiners to process more crude.