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Tanker rates extend rally on sanctions, need to load Mideast oil, products

Oil shipping rates extended their rally on expectations of a tightening up in worldwide tanker supply from wider U.S. sanctions on Russia's fleet and traders' need for ships to pack Middle East oil for Asia, market sources stated on Wednesday.

On Tuesday, Shell reserved three Very Large Crude Carriers, efficient in carrying up to 2 million barrels of oil, at the rate of Worldscale 70 to load Middle East crude in early February and Chinese refiner Shenghong Petrochemical booked two VLCCs for the exact same loading duration at the same rate, a. shipbroker stated.

Worldscale is an industry tool to determine freight charges. For contrast, China's Unipec earlier reserved 2 VLCCs for late. January packing from the Middle East at WS51-52.25.

Traders are expected to seek more tankers to load crude from. Saudi Arabia in February, which might drive freight rates. greater, the shipbroker said.

The robust demand pressed the rate for a VLCC on the Middle. East to China path, called TD3C, higher to WS70.45 on. Wednesday, up WS10.75 from the previous day, according to 2. shipbrokers and a trader.

This is equivalent to a 15% increase, bringing the cost to. charter a supertanker on that route to $4.1 million, said the. 2nd shipbroker.

Supertanker rates on other routes have seen similar. increase, he included.

The rate for VLCCs from the Middle East to Singapore increased by. WS10.45 to WS71.80, while the rate for West Africa to China. acquired WS9.23 to WS70.67, he said.

Shipping crude from the U.S. Gulf to China will now cost. $ 8.715 million per voyage, up $1.895 million from Tuesday, he. added.

ITEM TANKERS

Tanker freight expenses for tidy items such as gas,. diesel and jet fuel, have also increased by about 10% given that the. start of the week, according to data from SSY Tankers and trade. sources.

Some regional paths out of northeast Asia were currently. seeing an uptick in enquiries before the sanctions were. revealed as traders were hurrying to satisfy requirements before. Lunar New Year at end-January, one shipbroking source said.

The expense to deliver around 40,000 metric tons of refined fuels. from South Korea to southeast Asia has actually reached $685,000 from. $ 480,000 because the start of the year, SSY rates data showed.

Fresh sanctions on some medium-range (MR) tankers, that can. bring around 40,000 tons of tidy products, further drove up. freight rates, one Singapore-based source stated.

The individual included that sanctions on Aframaxes that carry. crude oil could drive demand for long-range (LR) tankers if some. charterers decide to switch to the latter, though it has not. took place yet.

However, another shipbroking source voiced scepticism about. an increase in freight rates, as sanctioned item tankers account. for only about 3-4% of the worldwide fleet. He said that the need. for MR tankers ought to alleviate after requirements for ships in. January are covered, with the impact on sanctions to be minimal. for this fleet.

Surging freight costs and spot premiums for Middle East. crude are squeezing Asian refiners' margins. Complex refining. margins in Singapore, the bellwether for the region, plunged to. $ 1.15 a barrel, from $4.69 on Jan. 9, before the sanctions were. announced, LSEG data revealed. << DUB-SIN-REF >

(source: Reuters)