Tanker Boom Shows No Signs of Slowing Down
The mood was predictably ebullient and bemused as tanker executives and analysts gathered in Manhattan on Wednesday at the 18th Annual Capital Link New York Maritime Forum. Spot rates are off the charts, with yet another record confirmed by the Tankers International pool this week: the 22-year-old very large crude carrier ST1 (IMO: 9256999) was fully fixed for a 12-day voyage loading inside Hormuz at $1.9m per day.
Ageing VLCCs used to go to the shadow fleet* versus the scrapyards; now they’re running the Hormuz gauntlet. The lump-sum rate on a single high-risk Hormuz voyage is higher than the VLCC scrap value. “We are going from record to record,” said TEN chief executive Nikolas Tsakos.
Historic Rate-Positive Consequences
The Hormuz crisis has evolved into even greater moneymaker for tanker owners. Historic rate-positive consequences of the Hormuz shuttle trade and Gulf of Oman ship-to-ship transfer operations are reverberating across the world’s crude and product tanker markets. According to Jorgen Lian, shipping analyst at DNB Carnegie, “There’s been a lot of theoretical talk about VLCC earnings potential, but the reality is that most people right now have the opportunity to fix at levels that are pretty close to the $1m-per-day mark on a round-voyage basis.
“That’s just a fairy tale number. We’ve never seen it before. Unfortunately, this is going to ruin our charts for the foreseeable future. This is a volatile industry and you can’t see the swings in the historical numbers anymore.” VLCC spot rates for Gulf of Oman (GOO) loadings were assessed by the Baltic Exchange at $823,213 per day on Thursday.
Tanker Executives Optimistic
There are plenty of takers for GOO loadings, including vessels of public companies such as DHT and Frontline, according to Tankers International data. “I haven’t been this optimistic since they got the vaccine for Covid,” proclaimed Scorpio Tankers president Robert Bugbee, who said he felt very differently only a few weeks ago.
“I had been very concerned until two weeks ago that we were at high risk of a world economic meltdown and a real crisis for the demand side. If you’d spoken to me three weeks ago, we were very concerned as a company about building up cash and deleveraging. We were very, very afraid of: what’s the end in this?
“But this last two weeks has been a real transition,” said Bugbee. “The combination of the US Navy and the Saudi, Kuwaiti and UAE willpower to get crude out of the Middle East Gulf, and the repair of the East-West Pipeline, has had an immediate result. You don’t even need peace with Iran — you just need the oil to come out.
“As soon as more crude started to get out of the Gulf, the Asian refineries said, ‘Fine, we’re willing to release more products into the market’, and the products rates have just gone straight up.”
Vessels Mentioned
- ST1 (IMO: 9256999)
Original Article: Some tanker bosses see boom lasting for years, not months — Lloyd’s List