The cost of hauling Caribbean oil to the U.S. surged to a five-year high amid speculation the region’s vessel supply is being diminished by months of delays to Libyan crude exports that are altering trade flows.
Aframaxes hauling 70,000 metric-ton cargoes on the route earned $85,285 a day today, the most since December 2008, according to the Baltic Exchange in London. Larger Suezmaxes departed the region to meet rising demand for West African oil shipments to Europe, George Los, senior market analyst at Charles R. Weber Co., a shipbroker in Greenwich, Connecticut, said by phone yesterday. That trade-route expansion helped Europe’s refineries cover a shortfall in Libyan crude, he said.
The rate surge shows how parts of the tanker market are recovering from a slump after the industry’s biggest vessels earned the most in 3 1/2 years at the end of 2013, according to Baltic Exchange data. Europe’s refineries, which just completed routine annual maintenance, need extra West African oil because it is similar to Libya’s, Los said. The North African country’s shipments have been curtailed by unrest since July.
“As the European refiners came back from earlier seasonal maintenance, to replace those light cargoes that they had been getting from Libya they had to instead go to West Africa,” Los, whose firm is among the oldest ship brokerages in the U.S., said by phone yesterday.
It cost $22.95 a ton to ship crude to the U.S. Gulf from the Caribbean on an Aframax tanker yesterday, compared with a 2013 low of $7.38 in June, according to data compiled by Bloomberg.
The three largest crude tanker markets will all earn more money this year than last, according to the averages of analyst estimates compiled by Bloomberg.