Suezmax Market To Be Hit Hardest By Iraqi Export Suspension

Depressed tanker markets will be hit hard by Iraq's decision to suspend crude oil exports for up to two weeks, tanker brokers said. Suezmax tanker rates in the Mediterranean are expected to be worst affected due to the cessation of Iraqi crude loadings at Ceyhan, and any hoped-for recovery for Middle Eastern VLCCs will be delayed. "It will particularly hit Suezmaxes in the Mediterranean because Russian exports have also been cut back," one broker said. Iraq has been exporting nearly a million barrels of Kirkuk oil a day - equivalent to one Suezmax vessel - from the Turkish port of Ceyhan. "There will certainly be no sign of any recovery for VLCC rates," another broker said. Tanker brokers had been pinning hopes last week on continued Iraqi exports from Mina al Bakr to drag VLCC rates up from depths below which they said it was not currently possible to fall because of high bunker prices. VLCC rates to Japan are currently around W45 ($4.75 per ton) and about W42 ($2.75) to the U.S. Gulf. Ships will have to take whatever cargoes are available, brokers said. It will depend on the terms of the fixture whether vessels fixed on subjects for Iraqi cargoes will be able to seek other charters. "But in the current situation, owners might be better off sitting it out for a promised cargo. There is so little about elsewhere that there is nothing much to go for," one broker said of both the Mediterranean and Mideast. Suezmaxes in the Mediterranean might switch attention to Side Kerir in Egypt or sail for West Africa, another broker said. "Otherwise they will have to wait for cargoes, because Novorossisk is not exporting at its full rate." Tonnage was building up in the Mediterranean with Suezmax rates of W67.5 ($2.30 per ton) done on Nov. 22 for a modern vessel, down from around W70 ($2.40) last week for older ships. The West Africa to the U.S. Gulf route was also soft with rates of W67.5 ($5.90) last seen. Up to 80 vessels were expected to be available in the Middle East over the next month, according to brokers, so, as is often the case, too many ships will be competing for too few cargoes. Iran's intention to defer further end of November liftings in order to stay within OPEC production constraints will further weaken the market, brokers said. Only Aframax 80,000 ton tankers could possibly benefit if OPEC exporters such as Libya and Algeria in the Mediterranean and Venezuela and Mexico raised their output during the period. - (Reuters)