The cost of shipping crude surged to all destinations, amid speculation that bookings are increasing to load crude.
According to a report in Bloomberg, the oil tanker rates soared to the highest in seven years amid an acceleration in the number of bookings and signs that the ships are being delayed when unloading due to a lack of space in on-land storage tanks.
Day rates for 2 million-barrel carrying ships sailing to Japan from Saudi Arabia, the industry’s benchmark route, surged to $111,359, the highest since July 2008, according to the Baltic Exchange in London.
Rates to the three destinations monitored by the Baltic Exchange in London all rose on Wednesday by 21 percent as measured by the industry’s standard Worldscale system.
The world is flooded with crude supply as OPEC persists with a Saudi Arabia-led policy of defending its share of the global oil market rather than cutting its own output to boost prices.
The Organization of Petroleum Exporting Countries is helping to keep the world flooded with oil by persisting with a strategy of defending its share of the global crude market, rather than propping up prices. It meets Friday to discuss that policy.
Oil tankers are increasingly having to store cargoes while they wait for space to clear in on-land storage tanks that are too full, according to Erik Nikolai Stavseth, a shipping analyst at Arctic Securities ASA in Oslo.