Middle East Oil Cargoes Seen at Record as Libyan Supply Plunges

Oil companies booked the most tankers to collect Persian Gulf crude since at least January 2007, amid plunging shipments from Libya, according to Marex Spectron Group.

Charters of tankers loading 2 million barrel cargoes rose to 143 so far this month, 15 percent more than the year-to-date average, the London-based commodities and freight swaps broker said in an e-mailed note today. Saudi Arabia, the largest exporter, has boosted output to a near record, partly compensating for lost Libyan oil, according to the International Energy Agency, a Paris-based adviser to 28 nations.

The North African country’s production fell to a post-war low of 150,000 barrels a day earlier this month as civil unrest blocked ports and oil fields, the IEA said. While Persian Gulf cargoes are rising, earnings for the tanker industry’s biggest ships haven’t rallied because of a capacity glut. Daily rates for very large crude carriers fell 74 percent to $5,002 a day this year, according to Clarkson Plc, the largest shipbroker.

“Saudi Arabia and other countries that have spare capacity are making up the shortfall after Libyan oil production slumped,” Gareth Lewis-Davies, a London-based energy strategist at BNP Paribas SA, said by phone. “Output from the Middle East has also grown over time, and there is the expectation that the Libyan shortfall might persist, and replacement barrels will be sourced from countries in the Gulf.”

The Libyan ports of Es Sider, Ras Lanuf, Hariga, Zawiya and Zueitina are closed, according to data compiled by Bloomberg yesterday. Italy is the largest buyer of the country’s oil, according to the IEA.

Replacement Grades

The tanker market has about 75 too many VLCCs, equal to 13 percent of the fleet, Frontline Ltd., the world’s largest owner of the ships until last year, said at the end of last month. There are 24 percent more supertankers in the Persian Gulf for charter over the next 30 days than cargoes, according to the median estimate of six shipbrokers and owners in a Bloomberg

“Saudi Arabia is continuing to pump high levels in order to keep the market well supplied at times of tension in Libya,” Simon Newman, the London-based head of tanker research at ICAP Shipping International Ltd., said by e-mail today. “While extra volumes are welcome for shipowners, it further boosts shorter Persian Gulf-East voyages at the expense of longer West African-East journeys, likely curbing earnings.”

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