Dubai: The cost of delivering Middle East crude to Asia, which climbed the most in more than five years yesterday, may extend its gains as the need for ships to store oil coincides with rising demand.
As many as 35 supertankers, enough to supply the European Union for almost five days, may soon be deployed to store oil, according to Frontline, the largest owner of the ships.
That come at a time when Israel's invasion of Gaza Strip has prompted rising demand for shipments, said Nikos Varvaropoulos, an official at Optima Shipbrokers in Athens.
"We are seeing increased activity most probably because of the war in Gaza" and demand from traders for tankers to hoard crude oil at sea, Vararopoulos said by e-mail.
Citigroup's commodity-trading unit Phibro has joined BP, Royal Dutch Shell and Koch Industries in storing crude at sea. They are doing so because oil futures rise as the year progresses.
Glasford Shippin, a Chinese shipper, hired an unspecified Iran-owned tanker for 61.5 Worldscale points, according to a report from Oslo-based PF Bassoe AS.
That is 8.5 per cent above the London-based Baltic Exchange's benchmark rate, which climbed 35 per cent to 56.66 point. That was the largest one-day gain since October 24, 2003.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in US dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
A rate of 56.66 points works out at $50,701 a day, according to the Baltic Exchange. Globally the carriers are making $43,855 a day.
