Some of the expected gains for the tanker sector from the European Union’s looming ban on Russian seaborne oil imports have already fed into soaring rates, say brokers.
Rates for some tanker sectors have gone “haywire”, with aframax time charter equivalents up 56% last week owing to limited tonnage availability as owners cashed in by shipping Russian crude before the ban starts.
The EU’s oil ban on imports from 5 December means European buyers will have to seek alternative supplies from Asia and the US, increasing voyage distances and further boosting rates.
But Europe has already begun switching to other sellers, and looming supply, insurance and tonnage problems for Russia could cut lead to production cuts for the world’s second-largest crude exporter. That would limit opportunities for owners willing to ship Russian oil after the ban if a price cap plan is introduced, said brokers.
The G7 group of nations, the EU and Australia will allow EU-supplied shipping and marine services, but only if the oil is sold at a price below a level agreed by the scheme’s architects. Russia has said it will not ship oil under the scheme.
Turkey has also demanded that tankers passing through the Bosphorus Strait will have to provide proof of insurance for the cargo from December 1, adding further complexities for Russian exports, said investment bank Fearnley Securities.
“While we believe the coming embargoes will be positive for tanker shipping, it seems some of the effects have already come,” it added.
Tanker rates have been increasing across all sectors amid the uncertainty. Tankers International said it had recorded total freight fees of more than $14m for a single charter.
The 319,200-dwt Maria P Lemos (built 2018) was last week chartered to ExxonMobil on subjects from late December for 117 days with time charter equivalent earnings of $95,521 per day, according to Tankers International.
The VLCC specialist said that would lead to freight income of $14.6m on the US to China route with rates for the biggest crude carriers continuing to climb.
The crude oil tanker market is reaching a crescendo
Nicolai Hansteen, Lorentzen & Co
“Currently, the crude oil tanker market is reaching a crescendo with midsize tanker segments going haywire,” said Nicolai Hansteen, chief shipping analyst at shipbroker Lorentzen & Co.
The highest rises in the dirty tanker sector are currently from aframaxes, with owners focusing on Russian cargoes, “given the premium associated”, said UK shipbroker Simpson Spence Young.
Some owners are waiting to assess the impact of the import ban and the associated price cap before making chartering decisions.
“With spot rates powering away and with the 05 December oil price cap date rapidly approaching, owners’ appetite to charter out at this juncture in any sector has somewhat waned,” said shipbroker Braemar. Some have preferred to “adopt a ‘wait and see’ tactic”, it said in a weekly note.
