European natural gas demand is…
The semiconductor foundry industry is…
Asian refiners are increasingly looking to book smaller tankers to load oil from the Middle East as the freight costs for chartering supertankers have surged after Saudi Arabia pledged to boost oil supply to the market and is provisionally booking supertankers in addition to its own fleet.
Malaysia’s state oil company Petronas has provisionally booked a Suezmax, capable of carrying 800,000 to one million barrels of oil, from the Middle East to Malaysia, Bloomberg reported on Monday, citing ship brokers, traders, and fixtures.
To compare, the supertankers, the so-called very large crude carriers (VLCCs), can transport up to 2 million barrels of oil.
The rates for the VLCCs, however, have jumped five to ten times in one week after the Saudis snapped up supertankers to flood the world with oil next month, leaving fewer VLCCs available and resulting in a price spike for the daily charter rates.
Some Indian refiners also look for smaller vessels for the relatively short trip from the Middle East to India, as ballooning supertanker rates haven’t tricked down to smaller ships yet.
“The spike in rates will push people to restrict VLCC use for faraway crudes and prioritize shorter voyages in Suezmax and Aframax vessels,” Hindustan Petroleum’s chairman Mukesh Kumar Surana told Bloomberg.
Aframaxes can carry between 500,000 and 800,000 barrels.
Some buyers may find the surging supertanker rates too steep to book in the coming month
Unipec, the trading unit of Asia’s largest refiner, Chinese Sinopec, is said to be attempting to defer or cancel the loading of at least four supertankers from the Middle East in April, due to higher freight rates and expected reduction in processing rates, sources familiar with Unipec’s plans told Bloomberg on Friday.
The current rush for supertankers and the subsequent price spike may not last long, especially if the provisional bookings don’t materialize in actual contracts, analysts and ship brokers say.
By Tsvetana Paraskova for Oilprice.com
More Top Reads from Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.