Rates for VLCCs collapsed by 15 percent overnight as shipowners scrambled to book voyages out of the Mideast Gulf before September 1 when OPEC cuts are expected to hit tanker demand. Exxonmobil fixed the Starlight Jewel for a 275,000-ton cargo to Singapore loading July 24 at W43.5 (about $0.42 per barrel), brokers said, compared to estimates of the route at W50 on Wednesday.
They said W42.5 could be done by the end of Thursday, representing a drop of nearly nine cents per barrel in the space of 24 hours. "There were about nine shipowners falling over each other to get that fixture, and for Exxon it was like taking candy from a baby," said one London broker. "It's been a quiet week and people are just very scared of September, a lot comes down to sentiment," he added.
OPEC agreed on July 25 to cut output for a third time this year from September 1 by a million barrels per day, or four percent, bringing its total 2001 cuts to 3.5 million bpd.
Brokers said that rates on eastbound VLCC routes were unlikely to fall much below W42.5, because owners were holding out for westbound cargoes, which would take them out of the Mideast Gulf for the whole of September.
They also said that owners of older turbine tankers would start holding out for stronger rates, because anything lower would be loss-making. Eastbound tanker rates climbed steadily throughout 2000 to hit a highpoint of over W195 in November ($3.30 per barrel on voyages to Japan).
Rates crashed to an 18-month low of around W40 in mid-June on fears that the suspension of Iraqi exports would affect demand. Iraq, still under United Nations sanctions imposed after the 1991 Gulf War, suspended oil exports
for the month of June to protest at a U.S./British plan to revise the sanctions terms but renewed deliveries once the plan was withdrawn. Since mid-June rates had been slowly recovering. - (Reuters)