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Tanker Market

OPEC Monthly Oil Market Report – June 2016

67

Spot freight rates

VLCC

VLCC freight rates dropped on average in May from the month before, down by 7%

from April, to stand at WS73 points. Increased activity at the beginning of the month

was seen to support VLCC freight rates, mainly in the Middle East and West Africa,

despite high vessel supply at that point. Spot freight rates further improved when June

requirements came onto the market.

However, rates edged down to reverse previous gains as sluggish demand in the

Middle East and West Africa combined with reduced delays in Asian ports to support

the expansion of available vessels on the tonnage list. Thus, Middle East-to-East

freight rates dropped by 3%, to stand at WS63 points. West Africa-to-East freight rates

followed the same pattern, though reflecting a higher drop of 12%, to stand at WS38

points. Freight rates for tankers operating on the Middle East-to-West route also

dropped by 8% from one month before.

Graph 7.1: Monthly averages of crude oil spot freight rates

Suezmax

As seen in the VLCC sector, Suezmax spot freight rates also underwent negative

development in May. At the beginning of the month, rates for Suezmax were weak due

to holidays and low activity, generally. Increased activity was only later able to stabilize

rates and prevent further drops.

In West Africa, spot freight rates for tankers operating on the West Africa-to-US Gulf

Coast route dropped by 21% to stand at WS63 points. Spot freight rates for tankers

operating on the Northwest Europe (NWE)-to-US Gulf Coast (USGC) route dropped by

8% to average WS63 points. Suezmax rates on both routes showed a higher decline,

compared with freight rates registered on the same routes the previous year.

20

40

60

80

100

120

140

20

40

60

80

100

120

140

May 15

Jun 15

Jul 15

Aug 15

Sep 15

Oct 15

Nov 15

Dec 15

Jan 16

Feb 16

Mar 16

Apr 16

May 16

Worldscale

Worldscale

Mediterranean/Northwest Europe (Aframax)

West Africa/USGC (Suezmax)

Middle East/Far East (VLCC)

Sources: Argus and Platts.