Hire costs for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage rose 2.2 percent to 46.53 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. The advance extended May’s climb to 39 percent. Each ship can hold 2 million barrels of crude.
The supply of VLCCs available over the next four weeks in the Persian Gulf, the world’s biggest cargo-loading region, was the lowest since November as of May 27, figures from Marex Spectron Group showed. Higher shipments to Asia from West Africa and to the U.S. from the gulf left fewer tankers free to take cargoes, according to Frode Moerkedal, an analyst at RS Platou Markets in Oslo.
“Refining capacity has re-emerged from its seasonal maintenance period,” Bjorn Kristian Roed, an analyst at Danske Markets in Copenhagen, said by e-mail today. “This has cut the available supply of vessels in the Persian Gulf.”
Frontline Estimate
Should charter rates reach 50 Worldscale points, owners could earn as much as $33,000 a day, according to Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo. Frontline Ltd., the tanker operator led by shipping billionaire John Fredriksen, said today its VLCCs need a daily return of $25,500 to break even as it reported a fourth straight quarterly loss.
Daily earnings for VLCCs on the benchmark journey climbed 7 percent to $23,318, according to the exchange. Its earnings assessments don’t account for owners’ efforts to improve returns by securing cargoes for return-leg voyages or reducing speed to burn less fuel, the industry’s biggest expense.
The Worldscale system is a way of pricing oil cargoes on thousands of trade routes. Each individual voyage’s flat rate, expressed in dollars a metric ton, is set once a year. Today’s level means hire costs on the benchmark route are 46.53 percent of the nominal Worldscale rate for the voyage.
The largest move among crude tankers tracked by the exchange was the 7.2 percent advance to 25.54 Worldscale points for VLCCs bound for the U.S. Gulf Coast from the Persian Gulf. The biggest one-day change for vessels shipping refined fuels was for tankers heading to the U.S. East Coast from Europe, which fell 1.9 percent to 131.88 Worldscale points.