Bloomberg News

Russian Oil-Tanker Rates Jump Most in 11 Weeks on Ship Demand

June 21, 2013

Charter rates to ship Russian oil from the Baltic Sea port of Primorsk jumped the most in 11 weeks as vessel demand accelerated in northwest Europe.

Hire costs for tankers to deliver 100,000 metric tons of Urals crude to Wilhelmshaven climbed 16 percent, the most since April 5, to 73.61 Worldscale points, figures from the London-based Baltic Exchange showed today. That equates to earnings of $16,745 a day, almost double yesterday’s return, according to the bourse.

Shipments from the Baltic to other ports in northwest Europe represent the second-largest source of demand for the vessels, which are called Aframaxes within the industry. Demand on the trade route will expand 5 percent to 1.8 million barrels a day this year, according to Clarkson Plc (CKN), the world’s biggest shipbroker.

“A busy week for the North and Baltic, both areas with firming rates,” London-based shipbroker Braemar Seascope said in a report. “With the tonnage list constantly tight, owners are still feeling bullish.”

The Worldscale system is a method for pricing oil cargoes on thousands of trade routes. Each individual voyage’s flat rate, expressed in dollars a ton, is set once a year. Today’s level means hire costs on the Baltic route are 73.61 percent of the nominal Worldscale rate for that voyage.

The exchange’s assessments don’t account for owners’ efforts to improve returns by securing cargoes for return-leg voyages or reducing speed to burn less fuel, the industry’s biggest expense.

The jump in Baltic tanker rates was today’s biggest change for ships hauling oil. Daily rates for very large crude carriers on the benchmark voyage to Japan from Saudi Arabia fell 0.2 percent to 40.92 Worldscale points, equating to a daily return of $13,581, according to the exchange. Each VLCC can hold 2 million barrels of cargo.

For ships carrying refined fuels, the largest move was for tankers heading to northwest Europe from loading ports in the Baltic region, which lost 1.5 percent to 182.14 Worldscale points, according to the exchange.

To contact the reporter on this story: Rob Sheridan in London at rsheridan6@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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