Oil Tanker Owners Pay to Move Crude in Wake of Supply Cuts
- Benchmark supertanker earnings turned negative on Tuesday
- Rate slump follows Saudi cuts, unwinding of floating storage
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Saudi Arabia’s oil production cuts have hit the tanker market so hard that owners of the biggest vessels are effectively subsidizing cargo deliveries on the industry’s main trade route.
Supertankers delivering 2-million-barrel shipments of the kingdom’s oil to China are losing $736 a day for the privilege, according to data from the Baltic Exchange in London on Tuesday. While owners might, in practice, be able to mitigate such losses by ordering captains to sail the vessels slower, the reality is that some ships are losing money on Middle East-to-Asia deliveries, according to Halvor Ellefsen, a shipbroker at Fearnleys.