Persian Gulf Tanker Rates Gain for Third Day on Vessel Demand

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

20 Nov 2010

The cost of shipping Middle East oil to Asia, the world’s busiest route for supertankers, climbed for a third day on increased demand. Charter rates for very large crude carriers, or VLCCs, on the industry’s benchmark Saudi Arabia to Japan route climbed 3.9 percent to 71.81 Worldscale points, according to the London- based Baltic Exchange today. “Owners can hold out for higher rates” after a “flurry” of bookings, Imarex Asia Pte, a unit of freight derivatives broker Imarex ASA, said in an e-mailed report today.
Returns from the Saudi Arabia to Japan route jumped 13 percent to $30,965 a day, taking them above the $30,900 that Frontline Ltd., the biggest operator, said Aug. 27 it needs to break even on the carriers. They had been below that threshold for the seven prior sessions.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, 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.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
The Baltic Dirty Tanker Index, a wider measure of crude oil transportation costs that also incorporates smaller vessels than VLCCs, gained 0.8 percent to 882 points, according to the exchange.

Source: Alaric Nightingale, Bloomberg