Tanker Rates Plateau After 90% Surge

Middle East tanker charter rates, up more than 90 percent since the start of the year, appear to have reached a plateau, shippers said.

Worldscale rates for chartering a very large crude carrier (VLCC) to transport two million barrels of crude oil from the Middle East to the U.S. Gulf now stand at W82.5-W85, compared with W42.5 at the beginning of January. To Japan rates have risen to W95-W100 from about W52.5.

That means the cost of shipping oil to the U.S. has almost doubled to $2 a barrel and surged to $1.50 barrel for crude going to Asia from the Middle East - rates at their highest in two years. Tanker brokers now expect rates to plateau out a little below current levels over the summer until increased oil production coincides with winter restocking in the autumn.

Increases of 40 Worldscale points over the first four months were unthinkable at the end of last year. Most shipping analysts did not expect a recovery until later this year. Industry experts credit the early recovery to the sinking of the tanker Erika and its legislative impact.