Poten: Sky-High Tanker Rates are Driving Refiners' Oil Buying Decisions
Poten: Sky-High Tanker Rates are Driving Refiners' Oil Buying Decisions
Poten: Sky-High Tanker Rates are Driving Refiners' Oil Buying Decisions
A review of Poten's Daily Market Report, which monitors spot freight rates on many of the key tanker trade routes, shows eyewatering numbers. Across t...
Even in a crazy market, shipowners tend to make rational decisions. A VLCC owner that discharged in Asia faces a choice: Ballast all the way to the U.S. Gulf to pick up a long-haul cargo to Asia, currently yielding around $400,000/day or take a (shorter) ballast voyage to West Africa or Brazil for a cargo to Asia, generating TCE's of around $650,000/day. Or, he can brave the AG market and potentially earn more than $1.0 Million/day.
This earnings discrepancy has kept VLCCs closer to the Asian market, leaving it to Suezmaxes and Aframaxes to do the heavy lifting out of the U.S. Gulf, turbo-charging their earnings. Our expectation is that as long as there is more crude oil demand than supply, tanker rates will remain strong. However, as soon as the crude oil market loosens, tanker rates will come off the boil quickly.