Kingdom’s oil output hike pushes up tanker demand

The number of crude oil tankers booked from the Middle East has surged 15 percent to a multi-year high this month due to an increase in Saudi Arabian exports, shipbrokers said.

Around 130 Very Large Crude Carriers (VLCCs) — most bound for refineries in Asia — have been contracted out for June, up from around 113 the previous month and the highest since at least August 2005.
“June has proven to be a bumper month in terms of oil output from the Middle East,” said broker firm Braemar Seascope in a research report. 

“We have counted 130 VLCC cargoes fixed for this month as Saudi Arabian output increased to compensate for the lack of production elsewhere.”
Saudi Arabia’s oil output is expected to jump to nearly 10 million barrels per day in June from 8.86 million bpd the previous month, industry sources said.
At least 97 VLCCs from the Middle East were booked for Asia in June, while 20 were headed for Europe and the US, said Tokyo-based broker firm Meiwa International. Each VLCC can transport 2 million barrels of crude oil.
The VLCC spot market has been the most active in years due to ample tanker supplies, low freight rates, and strong global oil demand. 

Traders said Saudi Arabia’s June fuel oil exports closed at around 485,000 tons following a flurry of deals for parcels lifting end of the month, down about 25 percent from May.
The fall was in line with expectations due to peak summer demand in the kingdom, they said.
Three deals, for about 225,000 tons, were done over the past one week, with most sold into an easing East Asian market that is expected to be better supplied in July. 

An analyst who estimates future shipments forecast that seaborne oil exports from OPEC, excluding Angola and Ecuador, will fall by 170,000 barrels per day (bpd) in the four weeks to July 2.
Exports will fall to 22.81 million bpd on average from 22.98 million bpd in the four weeks to June 4, UK consultancy Oil Movements said in its latest weekly estimate.
OPEC failed to agree on an output increase last week. Saudi Arabia said it would provide whatever oil was needed even without a new OPEC supply agreement.
The Organization of the Petroleum Exporting Countries has kept its formal oil output policy unchanged since making a supply curb of 4.2 million bpd in December 2008 to prop up falling prices.
Many OPEC members have increased supply informally since 2009, however, as prices and demand have recovered and after the conflict in Libya shut down that country’s exports earlier this year.
Yet OPEC’s output remains far below that of a year ago. OPEC’s exports in the period to July 2 are expected to be 740,000 bpd down from a year ago, mainly because of the loss of Libyan supplies, Oil Movements said.
Source: Reuters