Oil Tanker Rates Soar From Middle East as Traders Boost Bookings

  • Rates to three destinations tracked by Baltic Exchange jump
  • Shipping analysts say number of vessels booked is increasing

The cost of shipping crude from the Middle East surged to all destinations, amid speculation that bookings are increasing to load crude from the world’s biggest export region.

Rates to the three destinations monitored by the Baltic Exchange in London all rose on Wednesday by 21 percent as measured by the industry’s standard Worldscale system. That drove daily returns to Japan above $100,000 while those to the U.S. jumped above $50,000. Owners accept lower rates to the U.S. because it’s a longer voyage, with better prospects for return cargoes than when ships go to Asia.

The world is flooded with crude supply as OPEC persists with a Saudi Arabia-led policy of defending its share of the global oil market rather than cutting its own output to boost prices. The 12-nation group, which meets in Vienna on Dec. 4, has insisted that other producers must share a burden of tackling surplus crude. Demand is surging as oil refineries boost their crude oil consumption after completing routine maintenance, according to Eirik Haavaldsen, an analyst at Pareto Securities AS in Oslo.

“Everyone has been waiting for the winter rush,” he said. “High activity in the Middle East, which had been slow, picked up suddenly and pushed up demand. It was just a matter of time.”

That additional demand is curbing spare tanker capacity. There will be 12 percent more very large crude carriers than anticipated cargoes in the next four weeks, according to a Bloomberg survey of people involved in the trade on Tuesday. That’s the smallest excess in seven weeks.

Saudi Arabia-to-Japan rates jumped 25 percent to $103,211 a day, according to the Baltic Exchange’s data. Those to the U.S. Gulf added 30 percent to $56,556.

“Chartering activity for Middle East loadings has been high since last week,” George Los, a New York-based analyst for Charles R. Weber Co., said by e-mail. Vessels got delayed in Asia because some on-land storage tanks were too full to allow them to unload, limiting vessel supply in the Persian Gulf now, he said.

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