The cost of shipping Middle East crude to Asia, up every day this week, may stop rising as the demand for vessels from oil companies slows down.There are 65 very large crude carriers, or VLCCs, for hire within the next 30 days, according to a report yesterday from Paris- based shipbroker Barry Rogliano Salles. On July 14, there were 85 VLCCs, and 25 have been booked for cargoes since then. Oil-company officials are "relaxed" in their ship-hiring, and are arranging tanker rentals slowly, Per Mansson, managing director of shipbroker Nor Ocean Stockholm AB, said in an emailed note yesterday.
PetroChina Co, the country's largest oil company, hired an unidentified VLCC owned by Frontline Ltd., for 237.5 Worldscale points, a report from Oslo-based shipbroker SeaLeague AS yesterday showed. That's 0.5 per cent below the London-based Baltic Exchange's benchmark assessment yesterday of 238.75 points for a cargo to Asia.
Logistics
Demand for tankers often slows on the last trading day of the week because oil company officials try to conclude vessel- hiring earlier to avoid last-minute logistical problems. 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 US 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. At 238.75 Worldscale points, owners of double-hulled VLCCs can earn about $195,447 a day on a 39-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg marine-fuel prices.
Frontline Ltd., the world's biggest VLCC operator, said May 22 it needs $31,400 a day to break even on each of its supertankers.Bookings for VLCCs sailing from the Middle East to Asia account for 47 per cent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP. Shipments to the US and Caribbean, the second-biggest market, account for 14 per cent of demand for supertankers.
