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Asia's oil imports from US to rebound in May after freight rates drop: sources

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Asia's crude oil imports from the US are set to rebound in May after freight rates for ships to carry US crude to north Asia fell by 27 per cent from a week earlier, trade and shipping sources said on Friday.

[SINGAPORE] Asia's crude oil imports from the US are set to rebound in May after freight rates for ships to carry US crude to north Asia fell by 27 per cent from a week earlier, trade and shipping sources said on Friday.

A rise in Asia's oil imports from the US could displace demand for similar-quality oil from the United Arab Emirates, Africa and Europe.

The cost of chartering a Very Large Crude Carrier (VLCC) to move 2 million barrels of US crude to China has dropped to about US$8 million on Friday, down from US$11 million a week ago, the sources said.

"More US cargoes will come to Asia. It has been slow in the past two months," a source with a north Asian crude buyer said.

The volume of US crude to arrive in Asia in March is estimated to be at the lowest in two years while April's volume is even lower, Refinitiv data showed. US sanctions on Chinese shipping companies caused freight rates to surge in fourth quarter and raised the costs for US oil exports to Asia.

Freight rates could come under more downward pressure as the US will likely lift sanctions within days on units of Chinese tanker company Cosco that Washington accused of transporting Iranian oil.

"Timing-wise it could not have been worse because Q1 is also when there are maximum new builds to be delivered," said Anoop Singh, head of tanker research in Asia at Braemar ACM Shipbroking.

"We expect 14 VLCCs to be delivered in Q1 with 9 of these already on water."

However, a virus outbreak is expected to reduce China's oil demand in the first quarter, clouding the outlook for China's US crude imports.

The world's largest crude oil importer had been expected to increase energy purchases from the US as part of the Phase One trade deal between the countries.

REUTERS

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