Hike in M-E crude refining lifts long-haul tanker rates

[LONDON] The biggest expansion in Middle East crude refining on record is driving rates for vessels hauling everything from diesel to jet fuel toward a six-year high.

The Middle East will this year increase capacity to process crude by 530,000 barrels a day, or 6.4 per cent, the most in data going back to 1994, says Pareto Securities AS. More cargoes will diminish the number of idle vessels and daily rates for long-range tankers, each hauling 75,000 tonnes, will rise 29 per cent to US$18,000 in 2014, the average of four analyst estimates compiled by Bloomberg shows.

The expansion means more exports to Europe, Japan and Australia, voyages that can stretch to 8,400 miles, tie up ships for longer and reduce available capacity in the fleet of 1,324 vessels. Refineries in India and the US are also adding cargoes. The rate forecasts would make the carriers profitable for the first time since 2008 after a glut of ships caused a slump of as much as 93 per cent.