Shipping Fixtures See First Mideast Gulf-Asia Tanker Bookings, Post-Iran War
Tanker bookings for clean products loading inside the Middle East Gulf and heading to Asia have started to appear in shipping fixtures for the first time since the memorandum in mid-June aimed at ending the Iran war, marking the first signs of tentative recovery in the region’s shipping flows.
In the past week, shipping fixtures showed the Bani Yas booked to load 55,000 metric tons of naphtha from inside the Middle East Gulf on July 10 heading to Japan at a Worldscale rate of 425, and the Nautilus booked for the same journey and cargo but for July 8 loading and at a rate of WS 375. Another long-range 1 tanker, the Kition M, was booked to load naphtha from Ruwais on July 14 to head to Japan at a rate of WS 300.
These are among the first seen fixtures to ship clean products on this route since the Islamabad Memorandum was signed between the U.S. and Iran in mid-June to end the war which started in end-February and had almost completely shut the Strait of Hormuz.
The new tanker fixtures are part of a broader recovery in marine traffic through the strait, with daily vessel transits now at 30%-40% of pre-war levels after having fallen to less than 10% during the war, industry sources said.
However, the recovery remains tentative due to the perceived fragility of the agreement. It is no surprise that most of the fixtures seen so far are booked by Middle East Gulf refiners rather than the usual trading companies, the industry sources noted. National oil company Kuwait Petroleum Corp. has issued in the past two weeks tenders offering naphtha and LPG on a DES basis instead of its typical FOB basis.
Fixtures for cargoes loading inside the Middle East Gulf are also being done at much higher rates than cargoes loading from the Red Sea or west coast India. The Serengeti was booked last week to load 55,000 metric tons of naphtha from the Red Sea on July 7 to head to Japan at a freight rate of WS 250. Fixtures of middle range-size naphtha cargoes loading from west coast India for the same destination were meanwhile fixed at WS 245-250.
The spread between Middle East Gulf-Japan and west coast India-Japan freight rates for a LR 1 tanker was only around WS 15 in end-February, shipping fixtures showed.
Other than the Middle East Gulf to north Asia shipments, fixtures for clean products heading to east or South Africa have also started to show up, albeit at sharply higher rates. The STI Solace has been booked to load 90,000 mt from Ruwais on July 11 to head to northwest Europe, a route typically used for middle distillates, at a freight rate of $10 million, more than twice the rates seen on similar routes in January and February.
A full resumption in tanker traffic through the Strait of Hormuz depends on sustained political stability and normalized shipping insurance economics, neither of which appear likely in the immediate term, shipping sources said.
—Reporting by Hanwei Wu, hwu@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com