Med Tanker Market Pins Freight Rate Hopes on Libya Oil Export Push
Rising oil exports from Libya after months of disruption helped push Mediterranean tanker rates to the highest levels in nearly six months on Wednesday, and shipping players expected more gains in earnings as shipments from the OPEC member step up.
Aframax tankers on the Mediterranean route, which transport the majority of Libya's crude oil, normally carry loads of up to 600,000-700,000 barrels. Rates have been depressed in recent months due in part to slower exports from Libya.
Cross Mediterranean rates for aframax tankers rose on Wednesday to W126.70 in the worldscale measure of freight rates, or $32,080 a day when translated into average earnings, their highest level since late January, Baltic Exchange data showed.
"Aframax spot markets suffered in June but have near-term upside potential with Libyan crude exports rising," consultants MSI said.
Libya's output has been recovering since a deal with rebels to bring most of its port blockades to an end, although the process is expected to be slow.
"If Libyan oil terminals stay open, tanker rates could go higher from here," investment bank RS Platou Markets said.
Wednesday's rates compared with W102.75 or $17,874 a day on Tuesday and W85.50 or $7,958 a day on Wednesday last week.
"As there's still a couple of cargoes left in the market, we may see rates increasing even more," broker Fearnleys said on Wednesday.
With the return of some eastern output and the restart of a major western oilfield, the OPEC member's production has recovered to nearly 600,000 barrels per day (bpd), compared with its pre-oil crisis level of 1.4 million bpd, its acting oil minister said on Tuesday.
Oil traders remained cautious about any quick return of full Libyan exports. An oil official said on Wednesday Libyan would not be able to export oil through its two largest eastern ports before August, due to safety checks after a near year-long closure.
Violence also continued, with at least 15 people killed in the capital and the eastern city of Benghazi since Sunday. Fighting between rival militias has transformed Tripoli's airport into a battlefield, cutting the Libyan capital off from the outside world.
In other markets, brokers said rates on the world's benchmark VLCC export route from the Middle East Gulf to Japan were expected to ease off due to softer activity after the end of July's export forward loading program.
VLCC rates reached W45.93 on Wednesday or $19,568 a day from W46.97 or $21,229 a day on Tuesday and W49.90 or $25,748 a day last Wednesday.
"The July program is pretty much concluded while the August fixings are not in full swing yet," broker Marex Spectron said.
(By Jonathan Saul; Editing by Jane Baird)