Surging tanker rates push US crude shippers to use small vessels
They can be secured faster, enabling traders to move barrels despite the tight freight market
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[TEXAS] In a desperate bid to transport oil from the US Gulf Coast to Asia, shippers have taken the unusual step of booking smaller vessels as costs soar for the massive tankers typically used.
The move signals that Asian buyers are looking past the Middle East to secure much-needed crude as the conflict there escalates, making larger vessels less available and extremely expensive.
Each Aframax typically carries about 700,000 barrels of crude, meaning that it takes about three such vessels to move the same volume as a single very large crude carrier (VLCC).
While Aframax shipments are typically more expensive on a per-barrel basis, they can be secured faster, allowing traders to move barrels despite the tight freight market.
Several Aframax vessels have recently been booked to carry crude from the Gulf Coast to Singapore, with loading to be done in mid-March.
This includes the Sea Turtle and Kalahari booked by ST Shipping, the shipping arm of Glencore, and the Alicante, chartered by Thailand’s PTT, based on traders and shipping fixtures seen by Bloomberg.
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Julian Renton, an analyst at East Daley Analytics, said: “When a national oil company in Asia starts pulling crude from the Gulf Coast, it usually means the market is scrambling to replace barrels that are no longer reliably available from the Persian Gulf.
“One of the earliest signals is smaller parcel movements rather than full VLCC cargoes.” BLOOMBERG
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