Rapidly rising US crude exports have propelled freight rates for 2mn bl tankers in the Americas to six-month highs
Oil cargo movements from Venezuela, Mexico, Colombia, and Brazil to Asia have historically driven demand on the longhaul route, but the addition of US crude to the mix has meant greater demand for ships in the region.
The Caribbean-Singapore VLCC rate, a proxy for US-Asia VLCC freight costs, climbed on strong demand to $4.1mn lumpsum today, the highest level since 16 May, according to Argus data.
Exports reached a record of nearly 2mn b/d in the final week of September, according to the US Energy Information Administration (EIA).
Much of this volume is moving to Asia on VLCC tankers. This week, buyers including China's Unipec, Japan's JX, and South Korea Energy fixed an estimated five VLCCs to carry full or partial US crude cargoes to Asia in a combination of October and November loadings.
Other vessel segments, such as Suezmaxes and Aframaxes, also carry US crude to foreign buyers. Smaller tankers provide more port flexibility for loading and unloading, but on long-haul routes, VLCCs typically offer charterers the best $/bl rate.
Strong demand for US crude movements to Asia on VLCC tonnage helped account for VLCC's recent gains in the Caribbean and Gulf of Mexico region, a shipbroker told Argus.
Rising US crude exports to Asia on VLCC ships, and to a lesser extent on Suezmaxes, are also pushing Aframax rates in the Caribbean higher. Since shallow drafts at US Gulf coast ports prevent larger ships from loading cargoes directly, Aframaxes are often chartered to load the cargoes at the terminal and then transfer the oil onto the larger ships in the open Gulf of Mexico via lightering.