Black Sea tanker rates fall to 3-year low
The cost of shipping crude to southern Europe from the Black Sea fell to its lowest in more than three years as rising oil prices stifle demand and global production of tankers accelerates.
Crude oil traded at an 11-month high yesterday, denting refiners' earnings from processing Russian crude loaded at Black Sea ports.
At the same time, the fleet of vessels that carry the oil will have grown 7 per cent in two years by the end of this year, according to London-based Drewry Shipping Consultants Ltd.
'With oil prices at a record, refiners are reluctant to buy, and that's left a glut of tankers in the Black Sea and West Africa,' Luis Mateus, an analyst with Riverlake Shipping SA in Geneva, said in an e-mail. Tanker deliveries 'should have made a significant impact on the market', he said.
Refiners processing the Urals crude oil produced by Russia, the world's second-biggest exporter, were losing US$1.38 a barrel last Thursday, according to data compiled by Bloomberg.
The fleet of tankers with capacities between 120,000 and 200,000 deadweight tonnes will rise to 53.2 million tonnes this year, from 49.5 million in 2005, according to a Drewry e-mail report July 11.
Crude oil contracts for August delivery rose 87 US cents, or 1.2 per cent, to settle at US$75.92 a barrel on Thursday on the New York Mercantile Exchange, the highest closing price since Aug 9 last year.
Freight rates for suezmax tankers, which hold one million barrels, bound from Black Sea ports to refineries in the southern Mediterranean were at 79.4 Worldscale points on Thursday, the lowest since Sept 2, 2003, according to London's Baltic Exchange.
Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in US dollars a tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
At current rates, shipowners may be losing money. Based on a rate of 79.4 Worldscale points, operators of double-hull suezmax vessels earn about US$14,708 a day on the 12-day round trip between the Black Sea port of Novorossiisk, Russia and Augusta, Italy, according to a formula by RS Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.
Frontline Ltd, the world's biggest tanker company by capacity, said on May 30 that it needs to make US$22,000 a day on each of its suezmaxes to break even.
Crude oil traded at an 11-month high yesterday, denting refiners' earnings from processing Russian crude loaded at Black Sea ports.
At the same time, the fleet of vessels that carry the oil will have grown 7 per cent in two years by the end of this year, according to London-based Drewry Shipping Consultants Ltd.
'With oil prices at a record, refiners are reluctant to buy, and that's left a glut of tankers in the Black Sea and West Africa,' Luis Mateus, an analyst with Riverlake Shipping SA in Geneva, said in an e-mail. Tanker deliveries 'should have made a significant impact on the market', he said.
Refiners processing the Urals crude oil produced by Russia, the world's second-biggest exporter, were losing US$1.38 a barrel last Thursday, according to data compiled by Bloomberg.
The fleet of tankers with capacities between 120,000 and 200,000 deadweight tonnes will rise to 53.2 million tonnes this year, from 49.5 million in 2005, according to a Drewry e-mail report July 11.
Crude oil contracts for August delivery rose 87 US cents, or 1.2 per cent, to settle at US$75.92 a barrel on Thursday on the New York Mercantile Exchange, the highest closing price since Aug 9 last year.
Freight rates for suezmax tankers, which hold one million barrels, bound from Black Sea ports to refineries in the southern Mediterranean were at 79.4 Worldscale points on Thursday, the lowest since Sept 2, 2003, according to London's Baltic Exchange.
Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in US dollars a tonne, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
At current rates, shipowners may be losing money. Based on a rate of 79.4 Worldscale points, operators of double-hull suezmax vessels earn about US$14,708 a day on the 12-day round trip between the Black Sea port of Novorossiisk, Russia and Augusta, Italy, according to a formula by RS Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.
Frontline Ltd, the world's biggest tanker company by capacity, said on May 30 that it needs to make US$22,000 a day on each of its suezmaxes to break even.