The cost of moving oil around the world has hit an 11-year high as manufacturers scrambled to find new supertankers following a US blacklist by a major Chinese operator that has put dozens of ships on the sidelines.
"The market has gone bonkers by shock events as the Cosco tankers were blacklisted," said
Head of Research and Valuation at Athens, Greece-based Allied Ship Brokerage. "It's a bubble that can get bigger because of geopolitics before it bursts."
Carrying leaders say that US action late last month on allegations that the vessels were tied to illegal shipments of Iranian crude has hit more than 40 tankers operated by a subsidiary of
Cosco Shipping Energy Transportation
one of the world's largest tank owners and an important carrier for China's oil needs.
Washington seized pressure on Asian and European importers to search for crude oil in a tight market to secure oil load as winter approaches.
But with Iran and Venezuela's oil exports also under US sanctions and Saudi oil production still trying to recover after a September missile attack, oil traders have approached the United States for crude shipments.
The longer distance to move oil cargoes from the United States to Europe and Asia compared to moving them from the Middle East has pushed daily charter prices for the large vessels called very large crude oil shipers to their highest level since July 2008, according to the Baltic Exchange -data.
"There is a lot of confusion and uncertainty out there," said Paolo d & # 39; Amico, head of Intertanko, a trade body representing tanker owners. "Everyone is afraid of being hit by the United States, sanctions, and making about 50 VLCCs untouchable."
U.S. oil exports to Europe, which usually move in smaller tankers, hit a record 1[ads1].8 million barrels a day for the week ending October 7, according to Kpler, an energy market company. This is double the number of 924,000 barrels last week. But shipments to Asia, which are usually made at the VLCC, were almost reduced to half to 508,000 barrels.
A Singapore broker said prices for some VLCC loads on sailings from the US Gulf Coast to the Far East were more than $ 120,000 on Thursday. Average earnings for super tankers that collect cargoes from around the world hit $ 94,124 a day, up from $ 18,284 on September 25, when Washington blacklisted the Cosco fleet.
"VLCC to Asia is a rare commodity, the market is red-hot and will stay that way while US sanctions against Cosco ships are in place," said the broker, who asked not to be named because he is not authorized to talk to the media.
Senior US and Chinese officials square off trade talks Thursday at a pivotal moment in the countries' relationship with President Trump, who plans to meet the head of the Chinese negotiating team, Chinese Deputy Prime Minister Liu He, when the talks are scheduled to end Friday.
People with knowledge of the matter said that the Chinese delegation planned to raise the ban on thoughts during the talks.
Cosco Energy's parent company, the state-run Cosco Shipping Group, is the world's largest shipping company in terms of total capacity, operating more than 1,100 vessels of all types, including container ships, tankers and bulk carriers. The company is also part of Beijing's multitrillion-dollar belt and road initiative aimed at establishing infrastructure and distribution channels to expand China's influence around the world.
Cosco tanker ban covers around 6% of the global VLCC fleet, but other factors leave transport capacity close. Many large tankers and smaller ships are in dry dock and are equipped with sulfur-trapping exhaust systems ahead of a regulation to clean up the ship's emissions, which come into force in January.
"[freight rate] expectations for 2020 were already high because of the 2020 climate regulations," he said
chairman of Athens-based Capital Maritime & Trading Corp., which operates 10 VLCCs. "With so many geopolitical and industry-specific factors now pushing the market, it is difficult to predict when it will settle. But we expect the current strength to continue well into next year."
Write to Costas Paris at email@example.com
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