Seatrade-Maritime: Sky-high rates lure tanker owners into Gulf of Oman STS transfers

Published by Seatrade-Maritime

With Saudi Arabia’s East-West pipeline out of action following drone attacks and the Red Sea port of Yanbu effectively closed, the focus for Middle East oil cargoes has shifted back to the Arabian Gulf. But although oil cargoes through the Strait of Hormuz have increased somewhat in recent days, Gulf cargoes to east and west are way down on normal volumes.

To offset some of the shortfall, tanker owners have taken to risky ship-to-ship transfers in the Gulf of Oman. According to local reports, there are now many tankers idling in these waters and ‘stretching as far as the eye can see’, according to one source.

Clarkson Research Services said earlier in September that 15% of the VLCC fleet was sat off Oman up from 10% at the start of July.

On 17 September Tankers International reported the DHT Holdings 2018-built VLCC DHT Bronco fixed to ExxonMobil for Arabian Gulf – Singapore at $740,000 daily, while the AMCL 2016-built VLCC New Caesar was fixed to Vitol loading in Gulf of Oman for a voyage to China at $830,000 per day.

Weather conditions prevailing there today are slight to calm – Beaufort Force 1 to 2 – but seasoned mariners who know these waters stress how quickly the weather can change. Forecasts indicate that winds will pick up later on Monday with gusts of wind equivalent to Beaufort Force 3-4 and waves of up to two metres.

Ship-to-ship transfers can still take place at Force 4, described as a moderate breeze with winds of 11-16 knots. But mariners who know these waters warn that a Force 4 can rapidly worsen to become a Force 6 in just a few minutes. Tanker masters midway through a ship-to-ship transfer could well find their ships in peril.

For tanker owners sitting comfortably in their offices ashore, ship-to-ship transfers in the Oman Sea are a practical workaround, replacing the hazards of Hormuz voyages and possible damage to their vessels. But the volumes of crude oil that can be handled in this way will fall far short of those necessary to meet energy requirements in the east and west over the weeks ahead. The likelihood, therefore, is that energy prices will continue to climb in the coming days.

Tanker rates continued upwards towards the end of last week with rates on the TD3C voyage between Ras Tanura and Ningbo, China, climbing to an all-time record of more than $1.2 million a day, according to the Baltic Exchange’s market report on September 18. Meanwhile the Gulf of Oman to China TD34 index was up again, with a round-trip timecharter equivalent rate of almost $871,000 a day.