Bloomberg News

Oil-Tanker Rates Gain Most in Two Months Amid Hormuz Tensions

January 17, 2012

Jan. 16 (Bloomberg) -- Charter rates for supertankers hauling Middle East oil to Asia rose the most in two months as tensions persisted over a possible closing of the Strait of Hormuz.

Hire costs for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage advanced 6 percent to 56.10 industry-standard Worldscale points today, according to the London-based Baltic Exchange. That’s the largest increase since Nov. 10. Stronger demand from Asian refineries before China’s weeklong Lunar New Year holiday starting Jan. 23 contributed to the gain.

Iranian Vice President Mohammad Reza Rahimi threatened Dec. 27 to block the strait in response to a proposed European Union embargo on the country’s oil aimed at forcing talks on the Islamic republic’s nuclear program. The waterway is the biggest world chokepoint for crude cargoes, handling about 20 percent of oil traded globally, according to the U.S. Energy Department.

“Increasing tensions in the Strait of Hormuz are positive in the short term for VLCC rates in the Persian Gulf,” Martin Korsvold, an analyst at Pareto Securities AS in Oslo, said by phone today. Each of the ships can haul 2 million barrels of oil.

Daily income for VLCCs on the benchmark route jumped 32 percent to this year’s high of $18,492 after surging 24 percent on Jan. 13, according to the exchange. Its estimates don’t reflect speed changes. Owners can curb fuel costs, boosting returns, by reducing a ship’s pace on a return journey after unloading of cargo.

Fuel Costs

The price of ship fuel, or bunkers, rose for a ninth straight session, advancing 0.3 percent to $699.21 a metric ton, data compiled by Bloomberg from 25 ports worldwide showed.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

The Baltic Dirty Tanker Index, a broader measure of oil- shipping costs that includes vessels smaller than VLCCs, advanced 1.8 percent to 805.

--Editors: Dan Weeks, Nicholas Larkin.

To contact the reporter on this story: Rob Sheridan in London at

To contact the editor responsible for this story: Alaric Nightingale at

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