*VLCC Hopes Dwindle*
Looking at the paper TD3C, last week, saw a market that started badly, weakening as each day progressed. The lengthening of the list combined with no real enquiry or demand saw rates continue to slide with no apparent immediate solution. Spot has slipped below WS30 for the first time in around 5 years, as of close yesterday sitting at WS27.75. These are some of the worst fundamentals seen on VLCC and the TD3C route in a long time. Continuing on from this VLCC markets are still oversupplied, with an estimated 29% oversupply of vessels arriving into MEG in the next month, according to Trade Winds. It is estimated around 80 VLCC’s are still currently being used for storage or have been delayed for a minimum of one week, accounting for 8% of the total fleet. With charterers potentially opting for smaller vessels, VLCC demand is really starting to scrape the bottom of the barrel and will only decline further once all vessels are back in the spot market. With all this information it is hard to predict any improvements in rates for the preceding months. Looking at the curve the rest of the year will show little growth if any, with further out contracts such as Cal21 shaping up to be more valuable than Q4 as hopefully, by next year, the VLCC market will have its ballast tanks rebalanced.
*The U.S. Continues to Strike Venezuela and Iran*
The U.S. continues to prove a point to Venezuela and Iran, relating to the tanker industry and oil embargos. This time the U.S. has participated in a form of digital warfare, seizing a host of websites that are ‘alleged front companies’ used by Iran to arrange under-cover shipments of oil products to Venezuela, according to Trade Winds. These companies and websites, Mobin International, Sohar Fuel and Oman fuel now display the crests of the Department of Justice and Homeland security upon the U.S. Flag on their website. The Government is accusing these companies as being involved with and fixing the tankers, Bella, Bering, Pandi and Luna involved in the seizure of transporting illegal cargoes, touched upon two weeks back in mid-August. It is clear the dispute is still occurring and tensions will only be rising, hopefully, no major events spur from this political triangle of tanker tensions. As of yesterday evening, it seems that Iran is now fighting in U.S. Courts to get their seized cargo back, in further complications Mobin International, a Dubai based company, has been said to be in charge of buying the CPP and chartering the vessels, with the other two companies owning a portion of the products. The next move will be seeing how Iran and these companies respond to the allegations and if they hold up meaning this is the second shipment of Iranian Gasoline set for Venezuela this year.
The whole U.S. – Iran – Venezuela dispute is extremely complex with Washington composing a black fleet of around 170 vessels, tied to Iran with 65 being crude tankers, majority VLCC, according to Trade Winds. As sanctions increase “shadow economies” also increase. With Iran and Venezuela a good pairing, as one needs gasoline and the other has plenty of it to sell. Making things even more complex is that Iran and Venezuela seem to engage in barter exchanges supposedly using gold bullions as the payment method. However, Greek flagged tankers may be able to successfully move product between Iran and Venezuela as sanctions on these Greek-owned vessels would impede the U.S., cutting any U.S. Greek shipping entities from the American financial system. As can be seen, all is very complex and only with time and fresh news reports, will the tanker market be able to take in and fully understand the Geo-Politics at work in current issues.