VLCC rates on Persian Gulf-Far East fall below w70 mark

A build-up of excess tonnage coupled with a lack of activity has seen the Worldscale rate for moving crude from the Persian Gulf to the Far East on double-hulled very large crude carriers fall below the 70-point level, shipping sources said. After witnessing lackadaisical activity, South Korean charterer SK placed the double-hulled Astro Carina on subjects for a Persian Gulf-South Korea voyage, loading December 31, at a rate of w62.5.
"This [rate] is very low and it's below my expectations. So the next fixture will also [be done] at a very low rate," an owner said. "Owners are trying to clear their vessels before the Christmas holidays."

The benchmark Persian Gulf-Japan route was assessed by Platts at w70. While ship-owner sentiment has taken a beating since OPEC announced it would cut up to 2.2 mm bpd in production from January 1, 2009, ship-owners have also had to put up with a slow-moving VLCC market as fewer January cargoes were being covered by charterers.
"The rate is below the w65level now. The [differential in the] number of cargoes versus the vessels [available] is huge. The sentiment is really down," a Japanese charterer said. "Usually the rates increase before Christmas and decrease afterward. This has not happened this year [2008]."

Ship-owners, meanwhile, are expecting a big drop in the number of cargoes being exported from the Middle East after the OPEC cuts come in to force in January.
According to a research note by London-based brokers ACM Shipping, close to 60 mm barrels could be lost in January 2009 because of the OPEC cuts.