Black-Sea Tanker Rates Fall to Lowest in More Than 3 Years

Black-Sea Tanker Rates Fall to Lowest in More Than Three Years
By Grant Smith
March 8 (Bloomberg)

The cost of hiring oil tankers to ship 1 million-barrel cargoes of crude from the Black Sea to European ports fell to its lowest in more than three years because too many ships are available.

The fleet of so-called suezmax-class ships expanded 7 percent last year, according to London-based Drewry Shipping Consultants Ltd. Availability widened this month as increasing daylight hours speeded the passage of ships on the route from Russia to the Mediterranean.

``There are lots of vessels available,'' said Luis Mateus, an analyst with shipbrokers Riverlake RLS in Geneva. ``I don't see rates going up in the next few days.''

Freight rates from Black Sea terminals to ports in the Mediterranean were assessed at 91.3 Worldscale points yesterday by London's Baltic Exchange after declining for 11 consecutive days. That's the lowest since Sept. 10, 2003.

Delays through Turkey's 17-mile Bosporus Straits, which can reach about three weeks for a round-trip during the winter, have shortened to eight days. The waterway is the only sea route between Russia, the world's second-biggest oil exporter, and the Mediterranean.

Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

Oil shipments from Russia's main ports are due to fall 1.3 percent this month to 2.95 million barrels a day, according to schedules obtained by Bloomberg.

Based on a rate of 99.7 Worldscale points, operators of double-hull suezmax vessels can earn about $30,489 a day on the 12-day round trip between Novorossiisk, Russia, and the Italian port of Augusta, Sicily, according to a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline Ltd., the world's biggest tanker company by capacity, said Feb. 27 that it needs to make $22,600 a day on each of its suezmaxes to break even.

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