The cost of sending crude oil cargoes from West Africa to the UK Continent on Suezmaxes has dropped to the lowest level in almost 14 years due to an acute oversupply of vessels in the region.
The WAF-UK Continent route, basis 130,000 mt, was assessed Worldscale 5 lower at w40. This equates to $5.78/mt, the lowest level since a $5.74/mt assessment on September 18, 2002.
The assessment came on the heels of Petroineos putting the Phaeton on subjects at this level for a WAF-UKCM voyage loading August 19. A source close to the deal confirmed the fixture.
The ongoing Nigerian crude oil outages have resulted in a marked decrease in Suezmax inquiries in the region in recent weeks. Three Nigerian grades are currently under force majeure which amount to about 550,000 b/d currently not tradeable. The grades under force majeure are Qua Iboe, Brass River and Forcados, with all three out due to militant attacks by the Niger Delta Avengers, a newly form rebel group in the Niger Delta.
Additionally, lower August Suezmax stem counts in the Black Sea and Persian Gulf have resulted in a huge pile-up of tonnage in all regions.
“The problem is not just the number of ships on the list, it’s more the number of prompt ships,” a shipbroker said. “Even if we had delays or congestion at a port it wouldn’t make any difference. On my last count there were 22 ships that are free of cargo and can make it to WAF for August 20.”
Though cargoes continue to move from West Africa, there has been little reported spot market activity. Market participants partly attributed this to the fact that several oil companies were using their own ships to transport WAF cargoes, as opposed to trading the relets in the spot market.
Source: PlattsPrevious Next
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