With the Iranian oil embargo now in place, all bets are off at the moment for bunker prices, oil prices and tanker ship owners. During the first months of the year, the tightening of sanctions against Iran, caused - together with disruptions in Syria and Sudan - the ICE Brent oil price to reach up to $126.22/bbl by the middle of March, an increase of nearly $19/bbl from the end of 2011, said Gibson Research in its latest weekly report. As a result of higher oil prices, the Rotterdam 380cst bunkers were up by $87/tonne over the first quarter. Thankfully for owners, bunker prices have fallen since, as the oil price has shrunk with tensions easing and economic threats coming to the forefront, with the latest positive news on the Eurozone debt crisis, pushing oil upwards, as well as bunker prices. Asset prices have also continued to retreat, with newbuilding prices down to the lowest levels since 2004. Second-hand prices have also fallen dramatically, although there still appears to be investors/funds ready to snap up vessels.
According to Gibson, "we have witnessed a slow uptake of new orders, however interest in MRs is gaining momentum and the lure for ECO tankers may be too tempting for some owners to resist. Meanwhile the increasing supply of new tonnage continues to depress the markets, although the pace of growth is at last beginning to slow. Demolition prices for India started the year at $490/ldt, which attracted some sellers. However, latest prices have softened by about $100/ldt as demand for scrap steel retreats. The financial crisis in Europe and weaker world economic prospects have provided no reason for improved optimism. Over the past 6 months there have been a few bright spots for the tanker market and the summer months may be a difficult period for owners to weather, as a major recovery continues to elude the market" mentioned the shipbroker.
Meanwhile, in terms of the tanker markets this week, in the Middle East, Gibson noted that "halfway through the July VLCC programme, and halfway through the year, and the prognosis for both second halves holds little joy for Owners. This week has been steady in terms of enquiry, but 'steady' isn’t sufficient these days to allow for rates to build, though it has, for now, stemmed the slide. Currently levels to the East stand at around WS 40 with runs to the West posted at down to as low as WS 27. Suezmaxes began to simmer on much better volumes, but it was never enough to reach boiling point, and Owners could only manage to achieve rates that were no better than last week when little circulated. 130,000 to the East moves at WS around WS 77.5 while WS 45 is the mark to the West. Aframaxes started brightly, and initially forced rates to just above 80,000 by WS 100 to Singapore, but many deals failed, and rates fell back to WS 95 with even lower on the cards" said the London-based shipbroker.
In West Africa, there was "another damp squib of a week for suezmaxes as Charterers retained discipline, and merely drip fed their needs into the marketplace. Rates remained stuck in the low/mid WS 60’s for all Atlantic options, and will only move higher if Charterers lose focus. Actually they seem to have temporarily turned their attention to VLCCs where a late week surge of transatlantic interest has tightened availability considerably. The bad news for Owners is that higher rate demands will just serve to swing the game back to the smaller size once again, and Eastern runs will remain pegged by keen ballasters from that zone. Rates stand a little higher at 260,000 by WS 47.5 to the US Gulf, but stay at no better than WS 43 to the East with around USD 3 m asked for West Coast India" Gibson notes.
In the Mediterranean, "the traditional see-saw aframax motion continued here, as last weeks' downswing steadied, and then resumed upward momentum as Charterers threw their next tranche of cargo more recklessly into the marketplace. Rates rose to 80,000 by WS 150 cross-Mediterranean, but suezmaxes are now being taken on a part cargo basis to relieve the pressure, and before too long we’ll be on a downward path once again. Suezmaxes themselves started slowly but ended on a more active note. Rates haven’t, as yet, responded with levels barely higher than 140,000 by WS 67.5 Black Sea/Europe and 130,000 by WS 57.5 to the US Gulf, though there may be some more noticeable upside seen for a short while" stated the shipbroker's report.
Finally, in the North Sea, there were "minor variations upon a rather tedious theme for aframax players in the North Sea. Rates, yet again. Continue to operate at 80,000 by WS 95/97.5 cross U.K. Continent, and 100,000 by WS 75/77.5 from the Baltic, and will only shift higher if the Mediterranean bubble doesn’t burst. Suezmaxes saw very little of substance, but USD 2.85 m was paid for Singapore, and 135,000 by WS 57.5 for States discharge. VLCCs had more to play with as the fuel oil 'arb' briefly opened to allow for a clutch of deals to be concluded at an average USD 3.6 m for Singapore, though the window of opportunity seemed to have temporarily closed again by the weeks' end" concluded Gibson.
Nikos Roussanoglou, Bunker Ports News Worldwide