Oil shipments from West Africa are rising as buyers seek additional cargoes after Iran threatened to block the Strait of Hormuz, Arctic Securities ASA said.
An increase in cargoes from West Africa has reduced the supply of available ships, boosting charter rates for very large crude carriers, Oslo-based analyst Erik Nikolai Stavseth wrote in an e-mailed report today. Each VLCC can carry 2 million barrels of oil. The strait is a chokepoint for shipments of crude from the Persian Gulf.
“Some buyers are positioning for other cargoes from West Africa to compensate for any possible blockade of the Persian Gulf by Iran,” Stavseth said by phone from Oslo. “An increase in suezmax rates in West Africa results in less ships in the Persian Gulf, and this is net positive for VLCC rates in the gulf and West Africa.”