After a crazy week of Saudi oil spread around the world, crude oil prices dropped, crude freight rates increased. Then we entered to a calmer period of time that ship charterers paused and waited for the Saudis’ plans for April.
Sources say that the increase in tanker demand continues, and the expectation of interest with the floating storages will keep the tanker rates high by responding to the increasing oil abundance.
Saudi Arabia hired dozens of tankers for crude oil shipments in late March.
According to the ship’s broker data, a VLCC has been chartered at a charter rate of more than $ 350,000 per day to ship Saudi Arabia’s crude oil to the US Gulf. The prices prices on this route fell to $ 170,000 per day on Wednesday, but anyway remained far above average.
VLCC rates on the route from the Middle East to China have also calmed down, and the rate fell from about $ 265,000 a day on Monday to about $ 210,000 a day on Wednesday.
Decreasing demand for fuels forces the pressure on refinery margins to slow down production and design much comprehensive maintenance.
However, if the Saudis export their promised volumes in April, all bets are closed and freight rates continue to rise. In that case freight rates cost for almost a third of the total cost of crude oil unfortunately. Rising tanker rates reduce the refineries’ appetite for cheap crude oil.