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Shell, Shenghong book VLCCs to load Mideast crude in early

Feb

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Mideast to China VLCC rate rises 15% to $4.1 million

By Florence Tan

SINGAPORE, Jan 15 (Reuters) - Oil shipping rates

extended their rally on expectations of a tightening in global

tanker supply from wider U.S. sanctions on Russia's fleet and

traders' demand for ships to load Middle East oil for Asia,

industry sources said on Wednesday.

On Tuesday, Shell booked three Very Large Crude

Carriers, capable of carrying up to 2 million barrels of oil, at

the rate of Worldscale 70 to load Middle East crude in early

February and Chinese refiner Shenghong Petrochemical

booked two VLCCs for the same loading period at the same rate, a

shipbroker said.

Worldscale is an industry tool to calculate freight charges.

For comparison, China's Unipec earlier booked two VLCCs for late

January loading from the Middle East at WS51-52.25.

Traders are expected to seek more tankers to load crude from

Saudi Arabia in February, which could drive freight rates

higher, the shipbroker said.

The robust demand pushed the rate for a VLCC on the Middle

East to China route, known as TD3C, higher to WS70.45 on

Wednesday, up WS10.75 from the previous day, according to two

shipbrokers and a trader.

This is equivalent to a 15% rise, bringing the cost to

charter a supertanker on that route to $4.1 million, said the

second shipbroker.

Supertanker rates on other routes have seen similar

increase, he added.

The rate for VLCCs from the Middle East to Singapore rose by

WS10.45 to WS71.80, while the rate for West Africa to China

gained WS9.23 to WS70.67, he said.

Shipping crude from the U.S. Gulf to China will now cost

$8.715 million per voyage, up $1.895 million from Tuesday, he

added.

Surging freight costs and spot premiums for Middle East

crude are squeezing Asian refiners' margins. Complex refining

margins in Singapore, the bellwether for the region, slumped to

$1.15 a barrel, from $4.69 on Jan. 9, before the sanctions were

announced, LSEG data showed.