*

Shell, Shenghong book VLCCs to load Mideast crude in early

Feb

*

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

*

Clean product tanker rates up 10%, set for further gains

amid

pre-Lunar New Year demand

(Adds clean tanker rates and details)

By Florence Tan and Trixie Yap

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.

PRODUCT TANKERS

Tanker freight costs for "clean products" such as gasoline,

diesel and jet fuel, have also risen by about 10% since the

start of the week, according to data from SSY Tankers and trade

sources.

Some regional routes out of northeast Asia were already

seeing an uptick in enquiries before the sanctions were

announced as traders were rushing to fulfil requirements before

Lunar New Year at end-January, one shipbroking source said.

The cost to ship around 40,000 metric tons of refined fuels

from South Korea to southeast Asia has climbed to $685,000 from

$480,000 since the start of the year, SSY pricing data showed.

Fresh sanctions on some medium-range (MR) tankers, that can

carry around 40,000 tons of clean products, further drove up

freight rates, one Singapore-based source said.

The person added that sanctions on Aframaxes that carry

crude oil could drive demand for long-range (LR) tankers if some

charterers decide to switch to the latter, though it has not

happened yet.

However, another shipbroking source voiced scepticism about

a rise in freight rates, as sanctioned product tankers account

for only about 3-4% of the global fleet. He said that the demand

for MR tankers should ease after requirements for ships in

January are covered, with the impact on sanctions to be minimal

for this fleet.

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.