Thursday, April 12, 2007

Persian Gulf Tanker Rates May Snap 11-Day Decline

Persian Gulf Tanker Rates May Snap Eleven-Day Decline
By Grant Smith

April 12 (Bloomberg)

The cost of shipping Middle East crude oil to Asia may snap an 11-day slide as bookings by Exxon Mobil Corp. help reduce a surplus of vessels.

Exxon, the world's biggest publicly traded oil company, hired five tankers to collect cargoes in the last week of April, leaving 13 loads to pick up this month, according to an e-mailed report today from Paris-based shipbrokers Barry Rogliano Salles. There are about 18 so-called double-hulled tankers available to collect them, Athens-based Optima Shipbrokers said in an e-mail.

``There are plenty of ships to be honest but also plenty of cargoes,'' Mathieu Philippe, a broker for Barry Rogliano in Dubai, said in an e-mail. ``Some owners are ready to resist'' further discounts in freight rates.

Rates for Very Large Crude Carriers, or VLCCs, on the benchmark route to Japan fell an eleventh day yesterday to 58.6 Worldscale points, according to the London-based Baltic Exchange. One tanker, hired at a discount because it has only one layer around its cargo tanks, was booked at WS 52.5, Barry Rogliano said.

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.

At 58.6 Worldscale points, owners of modern Very Large Crude Carriers, or VLCCs, can earn about $33,015 a day on a 38- day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline Ltd., the world's biggest oil-tanker company by capacity, said on Feb. 27 that it needs $30,200 a day to break even on each of its VLCCs. It made $56,500 a day hiring out its double-hulled tankers, 50 percent more than for its single- hulled vessels.