Asian Oil Buyers Turn to Africa and Brazil as Tanker Rates Plunge

Résumé détaillé

Asian energy commodity buyers are increasingly turning to African and Brazilian grades, attracted by lower prices as rates for shipping oil out of the Persian Gulf remain near…

What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the…

Asian energy commodity buyers are increasingly turning to African and Brazilian grades, attracted by lower prices as rates for shipping oil out of the Persian Gulf remain near historic highs.

Freight rates were at record levels for South American and African cargoes earlier this year, but have now declined enough to entice Asian buyers, Reuters noted in a report, citing unnamed sources including traders, shipbrokers, and analysts.

The sources listed China’s Sinopec as one of these buyers along with South Korean SK Energy. Both companies bought West African crude cargoes recently. Sinopec’s trading arm Unipec bought two cargoes of Djeno crude from Congo, at a discount of some $22 to dated Brent, two unnamed traders told Reuters. SK Energy, for its part, provisionally chartered a Suezmax tanker to transport crude from Gabon to the South Korean port of Ulsan in December.

Angolan crude is also looking attractive to Chinese buyers as Russian ESPO trades at a rising premium, according to analysts from Energy Aspects.

“Softer long-haul VLCC freight rates are making west of Suez grades more attractive,” Energy Aspects analysts wrote in a recent note, as quoted by Reuters. Freight rates declined after hitting all-time highs last month, as buyers retreated. As a result, freight rates for very large crude carriers have sunk by 50% from October highs, and Suezmax and Aframax rates have also dropped sharply.

“The recent freight correction has been driven by improving vessel availability following October’s exceptional market tightness,” Vortexa shipping analyst Wanying Zhang said, as quoted by Reuters. “The number of laden mainstream VLCCs and Suezmaxes in East Asia has increased by approximately 15% since early September, suggesting a growing pool of vessels that could become available as they complete discharge operations.”

Tanker…

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