By Radarr Africa Business Desk
SINGAPORE, November 13 (Radarr Africa) – Asian refiners are buying Atlantic Basin crude again at lower delivered costs after tanker freight rates for African and Brazilian cargoes fell from all-time highs, according to Reuters reporting based on traders and shipping data.
Freight rates for very large crude carriers (VLCCs), excluding loadings inside the Strait of Hormuz, and for Suezmax and Aframax tankers have dropped about 50 per cent from their October peaks, according to Baltic Exchange data. Rates for all tanker types had reached record levels last month. Middle Eastern producers had been raising exports, which required ship-to-ship transfers outside the Strait of Hormuz to avoid attacks linked to the US war on Iran, and Chinese independent refiners had switched to non-sanctioned oil after a US blockade cut off Iranian exports, rushing to use their import quotas before year-end.
Unipec, the trading arm of Sinopec and the world’s top refiner, bought African cargoes last week. It bought two cargoes of Congolese Djeno crude at discounts of about $22 a barrel to dated Brent, free on board. It also provisionally chartered two Suezmax tankers to load West African crude for Asia in late November and early December, at worldscale rates of 475 and 410, and a VLCC on the same route for early December loading at W500. Sinopec did not immediately respond to a request for comment.
SK Energy, South Korea’s largest refiner, provisionally chartered a Suezmax to load Gabonese crude for Ulsan in December at W380, and declined to comment. An independent refiner in eastern Shandong bought 1 million barrels of Angolan Plutonio for delivery in late December or early January at about $15 above ICE Brent, according to two traders.
Angolan grades traded at premiums above $20 a fortnight ago. Brazilian Tupi last traded at a premium of $7 to $8 to December dated Brent for January arrival, against nearly $20 last month. Offers last month had been above $20 a barrel for Brazilian crude and above $40 a barrel for West African crude. One trader said delivered African and Brazilian crude costs to China have fallen by $5 to $10 a barrel from last month.
Wanying Zhang of Vortexa said the correction in freight reflects improving vessel availability after October’s exceptional tightness. The number of laden mainstream VLCCs and Suezmaxes in East Asia has risen by about 15 per cent since early September, she said, suggesting more ships will become available as they finish discharging.
Energy Aspects said in a note on November 9 that softer long-haul VLCC rates make grades from west of Suez more attractive, and that elevated premiums for Russian ESPO crude should also support Chinese demand for heavier Angolan grades.
Asian buyers of US West Texas Intermediate are still shipping it on Aframax tankers carrying 500,000 to 700,000 barrels each because VLCC rates remain elevated, traders said. Abu Dhabi’s Murban was still about $2 a barrel cheaper than WTI, according to one trader.
Brent crude traded at about $93.53 a barrel on Thursday and has moved between $72 and $120 since the Iran war began, according to The Associated Press.
The correction followed a period in which Asian refiners held back purchases because of high costs, which depressed spot prices, while more vessels became available after discharging their oil.
