Demand for Mideast oil tankers hits record
Spot market demand for supertankers carrying Middle East crude oil surged to a record high of 137 fixtures in November, representing 9.13 million barrels of oil per day, traders said on Monday.
The unprecedented activity in the spot tanker market is not driven by any significant increase in OPEC production, but by oil companies looking to take advantage of rock bottom freight rates in an oversupplied market.
The November Middle East programme surpassed the previous high of 124 fixtures of very large crude carriers (VLCCs), each capable of carrying 2m barrels of oil, reached in July, traders said. "Whether this will be repeated for December remains to be seen. But as the past couple of months have been very busy, it wouldn't be unreasonable to expect 125-130 fixtures," said broker firm Marex Spectron.
Oil companies have turned to the spot market instead of renewing long-term charter contracts, as a flood of new VLCCs provides the industry with assurances that tanker supplies will be more than ample for the foreseeable future. "Redeliveries from time charterers into the spot market compound a fleet growing from a wave of newbuildings," said US ship brokerage firm Charles R Weber.
"Thus, it makes sense that the number of monthly VLCC cargoes, which have materialized in the spot market in recent months, have risen with little significant affect on spot market earnings."
Crude oil tanker earnings on the Baltic Exchange's benchmark Middle East route have recovered in the last few weeks, trading at $10,479 on Friday, after tumbling to a record low of -$6,492 a day in late September.
The market has traded in negative territory for the majority of the last three months, meaning ship owners on average were pocketing less in revenue than they were spending to operate their vessel on a daily basis.
- With everything at stake, OPEC keeps everyone guessing its next output move
- Libya's oil potential: down the drain?
- How jobs and skills will solve the GCC oil dependency issue
- Nothing lasts forever: how the oil price slmup will affect Lebanon
- The domino effect: oil price decline to dampen infrastructure in the GCC