LONDON, 7 November 2004 — Top oil exporter Saudi Arabia has booked three very large crude carriers (VLCCs) to the United States for loading in December, shipping brokers said on Friday.
They said the Kingdom, acting through Vela International Marine, Saudi Aramco’s chartering arm, had provisionally hired the Olympic Legend and the Folk Sea to carry 290,000 tons of crude oil apiece to the United States. They are due to load on Dec. 4 and Dec. 1 respectively.
Brokers said Saudi had also booked the Equatorial Lion to carry 280,000 tons to the United States in a 12-16 December loading window. They also said Vela had booked the Grand Lady to carry a similar load to the US Gulf on Nov. 28-29, bring the total spot fixtures for November to three. The Kingdom has been a regular charterer on the spot market this year.
Saudi booked eight spot VLCCs carrying 16 million barrels of crude for delivery to the United States in October. Slightly more than the 14 million barrels of crude moved in September.
Saudi sells its oil to global refiners using its own massive fleet of 23 VLCCs and ULCC-class ships, with additional spot chartering on top to move the barrels if needed. Spot chartering by its Vela arm is almost exclusively reserved for US supply. It also sells its exports free-on-board to international oil companies which buy the barrels straight from any one of its oil terminals.
Meanwhile, prices for shipping crude oil from the Gulf jumped on Friday, climbing back toward record peaks made last month on December enquiry, shipping brokers said. Brokers expect prices to rise faster next week as demand lifts, and spare capacity strains.
“Next week will see a marked upturn in enquiry as charterers progress with their December programs and with only 18 modern units capable of presenting within the next 30 days further gains are certain,” E.A. Gibson shipbrokers said in a report.
Brokers said typical VLCCs journeys on the world’s benkchmark Gulf to Japan route jumped some 20 points to W282.50. Shorter-haul Singapore from the Gulf was trading some 2.5 points higher. VLCC routes to the United States jumped some 9.50 points to W187.50, with European oil deliveries trading at around W190.
Prices have bounced back toward peaks made late last month on December cargo demand, after dipping from the top of the market. However, they are still trading at levels not seen for over 30-years on many of the world’s core crude oil export routes.
Freight rates for journey’s from West African producer Nigeria also rose, though more modestly. VLCCs to the United States firmed some six points to W241.50, while million barrel vessels rose to W305.75. The Baltic Exchange’s “dirty” index rose 29 points to 3953. Prices are still trading at their highest levels since the Arab oil embargo of 1973 as OPEC pumps at historic levels to match the biggest increase in oil demand in 24 years.
Strong demand for sweet crudes ahead of the northern hemisphere winter, coupled with competition for spare VLCC tonnage from Asia and the United States, has helped the climb, experts say.
Crude freight prices, the most volatile across the spectrum of commodities, have been trading way over seasonal peaks this year as OPEC has pumped at capacity to tame soaring global oil prices and keep up with vaulting demand, especially in Asia.
