The rate to transport oil from the Caribbean on Aframax ships advanced to more than a three-year high amid a regional shortage of ships available for charter. Vessels left the area for the higher fees available in the Mediterranean or North Sea, said Matt O'Gorman, a broker at Dietze & Associates LLC in Wilton, Connecticut. Thick ice in the Baltic has boosted demand for so-called ice- class ships, further thinning supply, he said. Several days of fog last week at some US ports delayed the discharge of cargoes and boosted rates, he said. Some ships may not return to the Caribbean for another month, he said on Tuesday. The average rate derived by Bloomberg to transport oil in the Caribbean rose 5 points, or 1.2 per cent, to Worldscale, or WS, 430, equal to about US$96,430 a day, after expenses such as fuel and port fees. Rates are the highest since Oct 28, 2004, when they touched WS 450.
Houston-based broker Lone Star, RS Platou, Poten & Partners in New York and Galbraith's each reported WS 430 on Wednesday.
Chevron Corp contracted an Aframax to transit between the east coast of Mexico and the US Gulf Coast for two consecutive voyages, according to Lone Star's daily listing.
The Caribbean is the world's third-largest Aframax-tanker market, after the Mediterranean and South-east Asia. An Aframax is the most common tanker used to move oil in the region.
Meanwhile, the cost of shipping Middle East crude to Asia, at its highest since 2004, may rise as refineries hire ships for longer-haul shipments to Europe and the US, crimping vessel supply.
There are 21 modern double-hull tankers available for hire within the next 30 days, according to a report on Tuesday from Paris-based Barry Rogliano Salles. Two months ago there were 40 such ships competing for cargoes, according to the shipbroker.
Cargo demand from western hemisphere refineries is 'thinning the list' of available ships because such voyages are longer than the average east-bound consignments, said Halvor Ellefsen, a tanker broker at SeaLeague AS in Oslo. Owners are also having their aging very large crude carriers, or VLCCs, converted to become iron-ore transporters, he said.
The London-based Baltic Exchange's benchmark rate for shipments to Asia climbed to 308.44 Worldscale points on Monday, according to a report from the London-based Baltic Exchange. The last time it was higher was on Nov 30, 2004.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes.
At 308.44 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about US$288,039 a day on a 39-day round trip from Saudi Arabia to South Korea, based on a formula by RS Platou, an Oslo-based shipbroker, and Bloomberg marine fuel prices.
That means costs for refineries climbed 10.4 per cent to US$7.20 a barrel from US$6.52 a barrel on Dec 14.
Still, surging hire rates may slow the speed at which owners convert ships to iron-ore trades, Mr Ellefsen said. Next year, as many as 43 new VLCCs will enter service.
The cost of hiring a VLCC next year is US$65,054 a day, according to prices of forward freight agreements, or FFAs, from Imarex NOS ASA on Bloomberg that allow traders to speculate on, or hedge, the future cost of shipping oil. Next year's price of hiring capesize commodity carriers, the biggest assessed by the Baltic Exchange, will be US$128,500 a day, according to Imarex.
Frontline Ltd, the world's biggest VLCC operator, said Nov 15 it needs US$30,000 a day to break even on each of its supertankers.
Bookings for VLCCs sailing from the Middle East to Asia account for 47 per cent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP. Shipments to the US and Caribbean, the second-biggest market, account for 14 per cent of demand for supertankers.
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