Oil Freight Charges To Go Higher?

Bloated oil freight charges could surge yet higher this year, adding to the already inflated cost of world oil imports, shippers said. Tanker brokers are predicting a mid-November stampede to ship crude from the Middle East, pushing charter rates to new peaks amid a perceived shortage of quality vessels. In January, very large crude carriers (VLCCs) sailing from the Gulf to Japan were fetching a price of worldscale 49, equivalent to 75 cents a barrel. The rate since has more than trebled and now stands at WS 165, $2.50 a barrel. For a 250,000 ton, or 1.8 million barrel shipment, that means an increased freight charge of $3 million on a $50 million cargo of crude. "Eastern charterers have been paying higher rates," said one VLCC broker. "But those that want ships for cargoes to the West will have to pay even more to lure them over." Rates for a 280,000 tonner to the U.S. Gulf from the Middle East now stand at WS 130, more than $3 a barrel, having risen from W42, $1 a barrel, at the start of the year. The beneficiaries are tanker owners, the mainly Greek and Norwegian companies that run tanker fleets. "Tanker owners have good reason to feel confident," said London shipbroker Gibsons.