US sanctions hit global oil fleet as traders shun nearly 300 tankers

Author: 
Sat, 2019-10-12 01:57

Nearly 300 oil tankers globally have been placed off limits as
companies fear violating US sanctions against Iran and Venezuela,
driving freight rates to new highs, industry sources said.

The move has taken roughly 3 percent of the global oil tanker
fleet out of the market, according to industry sources and data on
Refinitiv Eikon, sending rates soaring to secure tankers to ship
oil, particularly to Asia.

“Freight rates are going through the roof and people are
getting very nervous with the cost of shipping,” a crude oil
trader in Asia said on Friday, declining to be identified as he was
not authorized to talk to media.

Unipec, the trading arm of China’s Sinopec, Swiss trader
Trafigura AG, oil firm Equinor ASA and Exxon Mobil Corp. are
shunning 250 tankers which have carried
Venezuelan oil in the past year.

Oil companies are also avoiding 43 oil tankers owned by COSCO
Shipping Tanker (Dalian) after the US last month imposed sanctions
on two units of Chinese shipping giant COSCO for allegedly
transporting Iranian crude.

COSCO Dalian also owns 3 percent of the global very large crude
carrier (VLCC) fleet and the absence of its ships was a key driver
for supertanker freight rates which hit new highs daily over the
past two weeks, traders and shipbrokers said.

HIGH LIGHTS
  • Exxon, Unipec ban 250 tankers.
  • Sanctions on COSCO Dalian put 43 oil tankers out of reach.
  • Global freight rates surge as tanker fleet dwindles.

“This is now a handicapped set of vessels which are difficult
to trade,” Anoop Singh, regional head of tanker research at ship
broker Braemar ACM, said, referring to the COSCO Dalian
tankers.

Disruptions from the recent attacks on Saudi oil facilities and
the ban on ships that called on Venezuelan ports in the past year
have exacerbated tightness in the tanker market, he added. Braemar
estimates another 23 VLCCs are also out of service to install
emissions cleaning equipment to meet stricter global marine fuel
rules from January 2020.

VLCC freight rates for key crude oil supply routes to Asia have
surged since the US ratcheted up sanctions in recent months.

The Singapore Petroleum Co, wholly owned by PetroChina, has
provisionally chartered VLCC Houston to load crude in the Middle
East for China in early November at 205 Worldscale points, in what
could be the highest rate so far in the market, a trade source who
tracks the market closely said on Friday.

The rate was at W67 prior to sanctions, according to a
shipbroker.

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Source: FS – All-News-Economy
US sanctions hit global oil fleet as traders shun nearly 300 tankers