May 1, 2020
Crude tanker rates have weakened, but will it last?
Today, for the first time since March 10, VLCC rates on the benchmark Arabian Gulf – China route have fallen below $100,000/day. Today, we assess VLCC earnings on this voyage at $76,500/day, some $33,000/day below yesterday’s number. While this is still a respectable number, it is nowhere near the record levels we have seen in recent weeks. As a matter of fact, these VLCC rates are at their lowest level since March 10, right after the previous OPEC+ deal fell apart and right before a Saudi chartering bonanza ignited the market in a big way.
Is this a temporary dip or a harbinger of even lower rates in the near term? Is this a matter of sentiment or fundamentals or a bit of both? While we don’t have a lot of fundamental data available to us yet, we can combine what we have with some anecdotal information to come up with a possible answer.
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