three more years for rates to recover: Too many crude carriers in Gulf

The biggest glut since 1996 in the supply of the largest oil tankers means owners will have to wait three more years for rates to recover, Moeller-Maersk A/S.

The global fleet of very large crude carriers expanded 28 percent over the last four years, Hanne Sorensen, chief executive officer of Maersk Tankers, said in response to e- mailed questions yesterday. The fleet is currently oversupplied by about 70 ships and as many as 50 more VLCCs will be delivered this year, Sorensen said.

The expansion followed a surge in shipbuilding that began in 2007 and 2008, when daily returns rose as high as $229,000, according to data from Clarkson Plc, the world’s biggest shipbroker. Daily earnings for supertankers plunged 71 percent to $8,705 in the past 12 months, Clarkson data show, amid the longest series of OPEC production cuts in four years. Frontline Ltd., the VLCC operator led by billionaire John Fredriksen, said Feb. 22 it needs daily returns of $24,200 to break even.

“We have to go back to 1996 to find a situation as challenged as the one we have today,” Sorensen said. “A recovery must be supply-driven, and that is not likely in the coming three years. The key area of demand for VLCCs is crude exports from the Persian Gulf to Asia,China, Japan, South Korea and India.”

[March 4]
Daily losses for VLCCs hauling Middle East crude to Asia as determined by the London-based Baltic Exchange, a global benchmark, widened to $3,514 from $3,082 on March 1. The ships lost $5,072 a day last month on average, exchange data show.