Tanker rates soar as Saudi's Bahri books up to 14 ships for rising output - sources
SINGAPORE (Reuters) - Saudi Arabia's National Shipping firm, Bahri , has tentatively chartered as many as 14 super-tankers to ship crude oil to customers worldwide, as the Kingdom follows through with its promise to boost crude oil output. 'VLCC's provisionally hired in the spot market for quite prompt dates – 10 days to 2 weeks forward – have surged over the course of the last two days,' said Anoop Singh, head of tanker research in Asia at Braemar ACM Shipbroking.
SINGAPORE (Reuters) - Saudi Arabia's National Shipping firm, Bahri <4030.SE>, has tentatively chartered as many as 14 super-tankers to ship crude oil to customers worldwide, as the Kingdom follows through with its promise to boost crude oil output.
"VLCC's provisionally hired in the spot market for quite prompt dates – 10 days to 2 weeks forward – have surged over the course of the last two days," said Anoop Singh, head of tanker research in Asia at Braemar ACM Shipbroking.
The spike in bookings by Bahri has helped to more than double the charter rates for very large crude-oil carriers (VLCC) amid this week's 'fixing frenzy', shipping sources said.
The bookings by Bahri are in addition to its own fleet of 42 VLCC's which it mainly uses to ship Saudi oil to customers across the world, the sources said.
VLCC tanker rates along the Middle East Gulf to China route have more than doubled to over $100,000 per day on Wednesday, up from about $30,000-$40,000 per day on Monday, according to several ship broking sources.
Saudi's state oil giant Aramco <2222.SE> said on Tuesday it would boost oil supplies to a record 12.3 million barrels per day (bpd) in April, or 300,000 bpd above its maximum production capacity.
On Friday, the Organization of the Petroleum Exporting Countries and its allies, including Russia, - together known as OPEC+ - failed to reach an agreement for deeper production cuts to support prices hit by the coronavirus outbreak, sending global oil prices plunging and threatening to overwhelm global oil markets with supply.
In February, freight rates plunged nearly in half as the spreading coronavirus hit demand for crude oil in China, the world's top importer, and after the U.S. partially lifted sanctions on one unit of Chinese shipping firm COSCO.
But as worries about the economic fallout from the coronavirus outbreak and its impact on energy demand continue to weigh, some of the increased Saudi exports may be destined for storage.
Some crude volumes onboard the West-bound tankers fixed by Bahri, which were about half of the ships it booked this week, "are likely to be headed straight into storage," said Singh.
As tanker rates jump, the prospects of storing the flood of oil supplies onboard tankers is also quickly becoming uneconomical, the shipping sources said.
"The 3-month contango (structure in crude oil) is about $1.5 per barrel, while a three-month floating storage would cost 50% more than that even on the cheapest of vessels," said Singh.
Floating storage is incentivised by the structure of the forward price curve, known as contango, where future supplies for are more expensive than those for immediate delivery.
(Reporting by Roslan Khasawneh, Shu Zhang and Jessica Jaganathan; Editing by Kim Coghill and Louise Heavens)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.