The cost of shipping Middle East oil to Asia, the world’s busiest route for supertankers, slid because there are more tankers than cargo.
According to Exim News Service, charter rates on the industry-benchmark Saudi Arabia to Japan route declined by 1.7 per cent to 42.67 Worldscale points, yielding owners returns of $17,567 a day, according to data from the Baltic Exchange.
The bourse’s prices are used to settle freight derivatives’ bets and hedging contracts.
"Few cargoes combined with too many ships keep fuelling the downward trend," an Oslo-based shipping consultant observed in a report.
Owners are battling the combined effects of expanding fleets and reduced supply of cargoes. The number of in-service very large crude carriers (VLCCs) has grown from 5.2 per cent to 525 vessels this year, according to Lloyd’s Register-Fairplay data.
By contrast, Middle East members of the Organisation of the Petroleum Exporting Countries (Opec) have cut their combined output by 2.8 per cent to 19.5 million barrels a day.
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 US dollars a tonne, are revised annually by the Worldscale Association here to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.