A huge oversupply of VLCCs for trades from the Mideast Gulf
has led to the most serious market decline in over two years, pushing rates to 13-month lows, brokers said. "The amount of ships compared to cargoes is phenomenal," said a Singapore broker. "Basically, you've got 75-80 ships lined up in the Gulf, so people think if they can find employment and get out of there quick, they'll miss the worst of it."
He said rates lost 10 worldscale points ($0.17 per barrel) on Thursday, to reach W58 ($0.98 per barrel) for 250,000 ton cargoes to Japan
, and that tanker owners had simply stopped negotiating in their rush to find cargoes.
"I think it'll go down further. We'll see at least W50 before it goes back up," he added.
Brokers pointed to a fixture to Taiwan's China Petroleum Co (CPC) for a 250,000 ton cargo, as the source of tanker owners' trouble. "The owner took the first counter (bid) from CPC. There was no negotiation at all," said one. "It won't be back in the Gulf for 25 days and by that time he hopes the market will have improved."
Brokers said that a slowing of activity out of Al Bakr, Iraq, had primed the market for disaster. "Ships that are usually doing 60-day westbound runs from Al Bakr are now just sitting around in the Gulf."
London's Baltic Exchange pegged the route from Ras Tanura to Chiba, Japan at W57 ($0.96 per barrel) on Thursday evening compared to levels of over W100 ($1.69 per barrel) a month ago.
Westbound routes from the Gulf also took a severe hit, falling to W65 ($1.83 per barrel) from W79 ($2.23 per barrel) a week ago. - (Reuters)