The number of crude cargoes loaded on VLCCs on a spot basis from the Persian Gulf to the US Gulf Coast and Europe has hit a year-to-date high of 31 for May, shipping sources said Monday.
"There has been a slight increase in the number of West-bound fixtures in the last couple of months. One possible factor is the Iranian situation," said Kevin Sy, Marex Spectron Group's Singapore-based freight-derivatives broker. "Shipments [have] increased as buyers probably tried to secure as many cargoes as possible in the event the Iranian situation grew worse."
Shipping data provided by brokers shows that spot fixtures to date in 2012 for the Persian Gulf to US Gulf Coast and Europe routes include 15 supertankers in January, 19 in February, 18 in March, 26 in April and 31 for May. A VLCC can move up to two million barrels of crude or fuel oil.
Data available shows that the Persian Gulf-West route averaged 20 fixtures/month for 2011, and is averaging 22 fixtures/month to date this year.
"I would say that Saudi Arabia had increased its crude supply and cargo volumes after charterers cut their Iranian crude imports," a Japanese VLCC broker said, adding that there has been an increase in movements from Basrah in Iraq and Saudi Arabia to the US Gulf Coast.
Saudi Arabian imports to the US were up 259,000 b/d week on week to 1.676 million b/d for the week ended May 4, Energy Information Administration data released May 9 showed.
The VLCC or supertanker fixture breakdown available for May shows Saudi Aramco's chartering arm Vela picking up 11 VLCCs to load from Ras Tanura to the US Gulf Coast, and ExxonMobil taking five VLCCs to move crude from the Saudi Arabia's Yanbu and other Persian Gulf oil-loading terminals to the US.
The other charterers moving crude to the US Gulf are Kuwait Petroleum Corporation, which has taken three VLCC for May-loading dates, and Petro Ineos and BP, which have a vessel each. Charterers such as Valero and BP have booked a supertanker each for Persian Gulf to the US West Coast voyages.
Among others, Shell fixed a VLCC to move two million barrels to Europe, while Irving and an unidentified charterer took a vessel each to move crude into the east coast of Canada.
"Vela is moving a lot of [VLCCs to the US Gulf Coast] at the moment. We have a seen a lot cargoes fixed with options to go the East and West finally going to the West," a source with a VLCC ship-owner said.
"During April we saw a lot of Persian Gulf-US Gulf Coast voyages. Now again for May loading [window], we are seeing the same trend. There is a decrease in the Suezmax [vessels] moving from West Africa to the US."
THIN SPREAD BETWEEN ROUTES
The spike in the supertankers fixed to go to the US Gulf Coast could be partly due to the thin spread between the Suezmax rate for the West Africa-US Gulf Coast voyages and VLCC freight level on the Persian Gulf-US Gulf Coast route, according to a VLCC broker.
Platts assessed the rate for hiring a Suezmax to move one million barrels on the West Africa-US Gulf Coast route at $17.84/mt last Friday, while a VLCC was priced at $18.59/mt to move two million barrels from the Persian Gulf to the US Gulf Coast.
"The freight advantage on shipping crude from the Persian Gulf to the US Gulf Coast is better that West Africa to the US Gulf Coast. The Suezmax rates have stayed firmer than the VLCCs for over a longer period," the VLCC broker said.
The spurt in the Persian Gulf to US Gulf Coast and Europe voyages are helping shipowners take tonnage out of the market for long periods, since vessels can come back to the Middle East for its next cargo only in two to three months' time.
"These voyages help in keeping the tonnage supply in the market well balanced," a second source with a VLCC owner said.
Source: Pradeep Rajan, Platts