Crude Oil-Tanker Rates Plunge as Available Ship Surplus Expands

Rates for the largest oil tankers hauling Middle East crude to Asia fell the most in a single session for more than a month as the supply of ships expanded.

Charter costs for very large crude carriers transporting 2 million barrels of cargo on the benchmark journey to Japan from Saudi Arabia slid 3.9 percent to 39.03 industry-standard Worldscale points, according to the Baltic Exchange, the London-based publisher of freight rates. That’s the biggest one-day fall since May 21, the data show.

The supply of VLCCs in the Persian Gulf over the next four weeks expanded by eight to 89, according to figures from Marex Spectron Group today. That compared with 58 tankers at the start of the month, the broker’s data showed. The VLCC fleet’s carrying capacity will expand 5.1 percent this year, near demand growth of 5 percent, according to Clarkson Plc (CKN), the world’s largest shipbroker.

Rates will remain between 40 and 42 worldscale points “for the immediate near term,” Marex Spectron said in an e-mailed report today.

Daily earnings for VLCCs on the benchmark voyage fell 9.9 percent to $12,393 according to the exchange. Those assessments don’t reflect owners cutting speeds to save on fuel, their biggest expense.

Worldscale points are a percentage of a nominal rate for more than 320,000 specific routes. Flat rates for every voyage, quoted in dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

The Baltic Dirty Tanker Index, a wider measure of oil-shipping costs that includes smaller vessels, slipped 0.5 percent to 580, according to the exchange.

The biggest one-day change in rates for ships hauling crude was for tankers shipping 80,000 metric-ton cargoes to Wilhelmshaven, Germany, from Primorsk, Russia, which lost 6.4 percent to 69.75 Worldscale points.

For vessels shipping refined fuels, the largest move was for tankers hauling cargoes to Europe from the U.S. Gulf, which increased 5.7 percent to 105.36 points, according to the exchange.

To contact the reporter on this story: Rob Sheridan in London at rsheridan6@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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