Oil companies increased the number of ships they hire to load at the region"s ports.
A surplus of supertankers competing to ship two million-barrel consignments of Middle East crude shrank for a second week as oil companies increased the number of ships they hire to load at the region"s ports. There are 11 per cent more very large crude carriers, or VLCCs, for hire over the next 30 days than there are cargoes, according to the median estimate of three shipbrokers and three owners. Last week the surplus stood at 17 per cent. Oil companies hired about 103 or 104 of the vessels to load at Gulf ports this month, the most since October last year, Halvor Ellefsen, a shipbroker at SeaLeague AS in Oslo, said on August 14. Rental rates on the Saudi Arabia to Japan route, which is used to settle bets on the cost of shipping crude oil, traded at about 40 Worldscale points every day last week, according to the London-based Baltic Exchange. The fleet of VLCCs has expanded 6.2 percent this year to 530 ships. By contrast, Middle East producers in the Organisation of Petroleum Exporting Countries cut combined output by 3.7 per cent to 19.3 million barrels a day.
Three respondents in the survey said supply shrank relative to demand, two said it gained, and one said there was no change. Owners" income after fuel costs from the Saudi Arabia to Japan route advanced 7.5 per cent to $14,300 a day last week, according to the Baltic Exchange. For the average of east and west bound sailings from the Gulf, earnings slipped 3.8 per cent to $6,252 a day. The carriers need to make $12,270 to pay crew, insurance, repairs, engine lubricants and other running costs, according to London-based Drewry Shipping Consultants Ltd.
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 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.