"Surging Demand to Move Crude Oil Sends Smaller Tanker Rates Soaring"

It's not just the little guys. As the first part of this story explains, the demand for ultra-hulkin'-huge carriers (UHHCs)* is through the roof as well.

First up Reuters via gCaptain:

A surge in demand to ship the flood of crude oil unleashed by Saudi Arabia and its OPEC peers is sending freight rates surging and forcing buyers to seek out space on smaller tankers after the largest ones have been booked out, shipping sources said.

Freight charges to ship oil in Suezmax tankers, which can hold about 1 million barrels, have in some cased increased ten-fold amid a shortage of very large crude carriers (VLCCs) which are capable of carrying as much as 2 million barrels of oil, the sources said.

“Bahri has wiped out the VLCC population for march lifting in less than a week which is why people are having to break up their loadings into Suezmax’s,” said Ashok Sharma, managing director of shipbroker BRS Baxi in Singapore.

Saudi Arabia’s National Shipping firm, Bahri, snatched up about 24 VLCCs since last week amid a bookings frenzy to ship crude oil to customers as it followed through on its promise to boost crude oil output in a price war with Russia and U.S. shale producers.

The cost of shipping crude oil on a Suezmax from the Middle East Gulf to India jumped to about $200,000 per day by Friday, up from about $20,000 per day in the week before, according to shipbrokers....MORE

Also, the first of the charts from Platts' Commodity Tracker: 7 charts to watch this week

The coronavirus pandemic continues to play havoc with commodity markets, but while many products have been pummeled by the weak demand outlook and the eruption of an oil price war, others are proving more resilient. S&P Global Platts news and pricing editors sort the bullish from the bearish in raw materials and energy markets. 

1. VLCC rates spike on Saudi crude deluge, floating storage demand

What’s happening? Asian VLCCs were hit hard by the coronavirus outbreak, with the benchmark Persian Gulf-China rate down by over 50% since the start of this year. This was due to a drop in crude purchases from China. But almost overnight, oil prices headed south towards the $30/b mark and Saudi Arabia decided to flood the market with crude. Saudi Arabia’s shipping company Bahri chartered more than a dozen VLCCs from the spot market and around three dozen VLCCs were chartered in the Persian Gulf in 24 hours, sending VLCC rates through the roof.

What’s next? As Saudi Arabia and Russia fight for market share, Riyadh has threatened to ramp up crude production to 12.3 million b/d by April. This will boost tanker demand, which is also seeing strong support from the floating storage market as traders take advantage of the wide contango in oil prices. Amid these factors, tanker rates will remain supported....MORE

HT: ZH

Related:
March 16
Bargain Buying: "India plans to top up strategic tanks with cheap Saudi, UAE oil - sources"
March 10 
The Saudis Aren't Kidding: In Exceptional Move They Book Oil Tankers In The Spot Market To Move Flood of Oil
March 9 
"Wanted: Tankers to Store Oil as Price War Augurs Glut"
March 9
"Oil Tanker Owners Frontline and Euronav Both Up 10% on the Day (EURN; FRO)"

*Euronav owns the two UHCCs that are currently in operation (the other two are permanently dedicated to storage):

We noted Euronav's purchase of Oceania, their second of two remaining Ultra Large Crude Carriers back in 2018. Here's it's partner, the slightly smaller* TI Europe:

File photo shows the ULCC TI Europe, one of two 3 million barrel capacity oil tankers currently in the world. Photo: Euronav 

*441585 DWT vs 441561 DWT - very close

As reported a few months ago:
Euronav Repurposes The World's Largest Tanker to Fuel Bunker for IMO 2020 Compliant Juice

So they loaded up with low-sulfur fuel oil and sent  Oceania to Malaysia and Singapore to parcel out  the IMO 2020 fuel.