VLCC Market Skyrockets In Middle East

The VLCC market has taken off in the Middle East Gulf, following the announcement of the December loading program, but rates remain steady, brokers said on Tuesday.

Four VLCC cargoes were fixed by SK Corp for discharge in South Korea between the 19th and 26th of December. At $2.30 per barrel, the fixtures were cheaper than LG's fixture of the Front Tobago at W170 ($0.14) or Hyundai's fixture of the Sylt at W175 ($0.15).

Seven VLCCs from the Tankers International pool were also fixed for Middle East cargoes to South Korea by unknown charterers. Tankers International is the world's biggest VLCC operator, controlling an estimated quarter of the modern fleet.

This surge of activity follows a quiet spell, during which rates refused to slip, bolstered by tanker owners' extreme confidence in today's market.

December had long been forecast as the summit of this year's freight rate achievements. However, ships are building up in the Middle East Gulf.

"There's lots of tonnage around," said a broker, "so rates to the East are not now expected to reach W200 as we had been predicting."

One ULCC cargo was fixed to the US Gulf by Exxon at W110 ($0.09), while VLCCs are expecting about W130 ($0.11) on that route.