Daily rates for chartering a supertanker to carry oil from the Middle East to Asia have soared this week to the highest since April as the number of cargoes booked this month for Middle East-Asia routes has exceeded expectations, ship brokers and analysts have told Reuters.
From strength to strength
Refineries in Asia have mostly completed spring maintenance and are increasing run rates to meet fuel demand in the summer driving season. In addition, the number of tankers booked this month to ship crude from the Middle East has jumped to the highest so far this year, according to a tanker broker at Fearnleys, who spoke to Bloomberg this week.
“The VLCC market has gone from strength to strength in the week gone by,” Fearnleys said in a weekly report on Wednesday, referring to the market of very large crude carriers (VLCC) capable of carrying up to 2 million barrels of oil.
The jump in the number of tankers that have joined the so-called “dark fleet” to ship Russia, Venezuelan, and Iranian oil has additionally tightened tanker availability in recent months.
Port operations disrupted
What’s more, this week, the tropical cyclone Biparjoy in the Arabian Sea has disrupted port operations on India’s western coast and tankers could be delayed on their return to the Middle East.
The biggest driver of surging supertanker rates seems to be the larger number of Middle East cargoes going to Asia booked this month. “We are seeing more end-June cargoes than expected,” an anonymous shipbroker told Reuters.
At least 156 tankers are being chartered to load crude in the Middle East en route to Asia this month, compared to 137 in May, the shipbroker added.
It’s not clear how much the surge in supertanker rates will last, considering that Saudi Arabia will be cutting its supply by 1 million barrels per day (bpd) in July, analysts say.
“While it remains to be seen how long-lived the bull run will be, considering the expected reduced volumes in July, the rate spike illustrates how tight the VLCC market is and helps to clear the tonnage list in the region,” Clarksons Securities analysts wrote in a report cited by Bloomberg.
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