VLCC seeks diesel loading in US Gulf coast
A very large crude carrier (VLCC) is available to load ultra-low diesel in the US Gulf coast, with the 270,000t cargo size likely to draw cargoes away from the 38,000t medium range (MR) tanker-dominated market for US Gulf coast refined products shipments, if its owner can secure a deal.
The operator of the Nissos Kea VLCC, owned by Okeanis Eco Tankers (OET), began seeking a diesel cargo in the US Gulf coast on 23 August, and the vessel remained available on Monday, according to shipbrokers. It is uncertain whether the vessel can secure a deal for a diesel voyage. Another of OET's VLCCs, the Nissos Kikouria, similarly cleaned up for a potential diesel loading from the Mideast Gulf in late July, but ended up loading a crude cargo from the region instead.
The rare crossover in the US Gulf coast from the crude vessel segment comes in the wake of VLCC owners cleaning their vessels thoroughly to ship diesel cargoes into Europe around the Cape of Good Hope from the Mideast Gulf amid the ongoing Houthi rebel threat for Suez Canal transits.
The Argus-assessed rate for a US Gulf coast-Europe voyage loaded onto an MR tanker stands at $31.12/t, while the rate for a VLCC carrying a typical 270,000t crude cargo to Europe from the US Gulf coast is at $11.48/t based on a lumpsum rate of $3.1mn, without considering lightering costs necessary to physically load the vessel and likely demurrage costs associated with that loading. The rate proposed for the potential diesel cargo loaded onto the Nissos Kea was at $3.95mn on Friday, according to some shipbrokers, which could reflect a premium sought by the shipowner for the atypical loading.
A major US refiner considered chartering the VLCC to take diesel, the refiner confirmed to Argus today, while noting that the cost discussed for the Europe-bound voyage was well below $3.95mn.
The global VLCC market has been under pressure since mid-May amid weaker crude demand in Asia-Pacific, especially in China, the world's biggest oil importer. VLCC rates from the US Gulf coast to Europe fell to $2.7mn on 13 August, down from from $4.95mn on 20 May, which could entice shipowners to consider more lucrative opportunities in the refined products market.
European buyers are not the only ones in the market for large diesel cargoes loaded onto crude tankers. Petrobras shipped two diesel cargoes loaded onto Suezmax crude tankers from the Mideast Gulf to Brazil in late July.
Brazilian buyers showed a propensity for larger cargoes as recently as 20 August, when Brazil's demand for long range 1 (LR1) clean tankers from the US Gulf coast boosted physical activity for the 60,000t tanker segment to its highest in 2024 for a single day. The jump in demand from Brazil for US Gulf coast-loading products comes as Russian focuses on domestic stockpiling, making US Gulf coast-loadings much more competitively priced for Brazilian buyers than during most of the period since Russia's invasion of Ukraine in February 2022.
Related news posts
US shale firms boost output goals on efficiency gains
US shale firms boost output goals on efficiency gains
New York, 26 August (Argus) — The efficiency gains that were one of the key drivers behind last year's surprise jump in US crude output are now back, and are spurring shale producers to increase 2024 targets just as Opec is gearing up to unwind its supply cuts. Upward revisions from publicly-traded US operators including Diamondback Energy, Devon Energy and Permian Resources are modest for the most part, but they may still be enough to ruffle some feathers in Vienna as Opec+ prepares to start reversing a combined 2.2mn b/d of production cuts in the coming months. "With domestic energy production a key topic in the 2024 US presidential election and Opec+ perhaps having prematurely expected lower shale oil volumes, [second-quarter] earnings serve as a reminder that shale will continue to be a growing, albeit perhaps more predictable, supply source on the global stage," consultancy Rystad senior analyst Matthew Bernstein says. Overall US crude production growth is still expected to slow in 2024 after last year's 1mn b/d gain defied all expectations. But improved techniques that have sped up the drilling process are helping operators get more bang for their buck, and are leaving more cash on the table for shareholder returns. Such gains are also bolstering the case for further consolidation in the shale patch as firms benefit from lower costs for oil field services. "What was unexpected is the scale of efficiency gains that have helped deliver lower [capital expenditure] as operators drop rigs and hydraulic fracturing (frac) spreads," analysts at bank Jefferies say. The gains have come from drilling three-mile lateral wells along with the adoption of electric fracking fleets, which has increased pumped hours and led to faster cycle times when it comes to well completions. Diamondback typifies the new industry spirit after boosting its full-year production outlook despite reducing drilling activity to 10 rigs from 12 and its frac fleet count to three from four. "We are clearly doing more with less and becoming more operationally efficient each quarter," chief executive Travis Stice says. Frac competition Healthy competition among crews is driving productivity gains, Devon Energy says. The producer has 16 rigs and three frac crews active in the prolific Permian basin of west Texas and southeast New Mexico. "We rack and stack all 16 rigs every day on how they're doing," chief operating officer Clay Gaspar says. "There's a first place and there's a last place... and those companies know, those engineers know exactly where they stand." The US majors are also getting in on the act, with Chevron upping its full-year production growth outlook for the Permian to about 15pc from 10pc, after flagging new techniques such as the ability to frac three wells at the same time. "We're one of the first operators to deploy triple-frac, delivering cost reductions of more than 10pc and shortening completion times by 25pc," chief executive Mike Wirth says. The downside to efficiency gains can be seen when it comes to natural gas, where production remains robust even as activity slows in response to lower prices. "But the industry appears ready to respond by pulling the curtailment lever again," bank Citigroup analysts say. US independent EOG Resources expects oil output from the lower 48 states will exit this year the same as at the end of 2023, with limited gains expected for total US supplies from offshore operations. "Activity levels, as reflected in the rig count, indicate continued lower oil production growth through to at least mid-2025," EOG chief executive Ezra Yacob says. Yet that did not stop the company from increasing its own full-year output guidance while keeping spending unchanged. By Stephen Cunningham US tight oil production Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Middle East tensions ease after Israel-Hezbollah clash
Middle East tensions ease after Israel-Hezbollah clash
Dubai, 26 August (Argus) — The risk of a wider regional conflict in the Middle East increased with Lebanon's Iran-backed militant group Hezbollah and Israel trading large-scale blows on 25 August. But tensions eased later in the day as Hezbollah's leader signalled the end of the "first phase" of their response to the elimination of its top military commander last month. "It is an initial response," Hezbollah's secretary-general Hassan Nasrallah said in a televised speech, adding that they'll assess results to see if the intended goal of the attack is satisfactory. "We consider the response to the assassination of Fuad Shukr has been completed ." "If the result is not sufficient, we will reserve the right to respond until a time we choose. Now the country [Lebanon] can rest and people can return to their homes and lives," Nasrallah said. He noted the group's main target was a military intelligence base about 110km inside Israeli territory, the deepest attack yet and just 1.5km north of Tel Aviv. The risk of a wider conflict, which could draw Iran in, pushed oil prices up, especially with Israel carrying out what it said is a "pre-emptive strike" against Hezbollah positions in southern Lebanon less than an hour before the latter launched its operation. As of 08:20 GMT the Ice front-month October Brent contract was at $79.97/bl, higher by 95¢/bl from its settlement on 23 August when the contract ended $79.02/bl. Israel's assault was based, Israeli officials said, on intelligence that Hezbollah was about to fire thousands of missiles at northern Israel, as well as drones at a key intelligence centre just north of Tel Aviv in retaliation for the killing of its commander in July. Nasrallah admitted the pre-emptive strike noting that, "[Israel's] focus was to reveal this operation in advance, and [say] that Israel took proactive action and thwarted the operation." "This narrative is full of lies. But if this narrative helps calm the madness of the Israelis, then there is nothing wrong with it," he said, adding that the group had been able to carry out its attack "as planned," denying statements by the Israeli military that its pre-emptive strikes had stopped a wider attack. There was no damage to any Israeli military base, Israel's military spokesperson brigadier general Daniel Hagari said. Israel's foreign minister Israel Katz stated that the country was not seeking a full-scale war, although Israeli prime minister Benjamin Netanyahu issued a warning, suggesting that further action might be forthcoming. Stalling the ceasefire The timing of these strikes coincided with high-stakes negotiations in Egypt's Cairo aimed at brokering a ceasefire in Gaza between Israel and the Palestinian militant group Hamas. The conflict has dragged on for 10 months and pushed the region to the brink of a wider war multiple times, with Iran and Israel directly targeting each other for the first time in April. The talks have not achieved a breakthrough, with Hamas claiming that Israel has "set new conditions for a ceasefire" and "is still procrastinating." The group also accused the US administration of President Joe Biden of "planting false hope by talking about an imminent agreement for electoral purposes." One key sticking point in the continuing talks mediated by the US, Egypt and Qatar is Netanyahu's insistence on the Israeli presence in the so-called Philadelphi Corridor, a narrow stretch of land along Gaza's southern border with Egypt. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Oil rises as Israel-Hezbollah clash fuels uncertainty
Oil rises as Israel-Hezbollah clash fuels uncertainty
Singapore, 26 August (Argus) — Oil prices have climbed today as tensions escalate in the Middle East following Israel's pre-emptive strike against militant group Hezbollah's positions in southern Lebanon. The potential for wider conflict in the region has raised concerns about oil supply disruptions. As of 05:18 GMT the Ice front-month October Brent contract was at $79.52/bl, higher by 53¢/bl from its settlement on 23 August when the contract ended $1.80/bl higher. The Israeli military launched an air operation involving approximately 100 aircraft to neutralise Hezbollah missile launchers. This action came in response to Hezbollah's attack on Israel, which included hundreds of rockets and drones, marking one of the most severe clashes in nearly a year of continuing hostilities. The timing of these strikes coincided with negotiations in Egypt's Cairo aimed at brokering a ceasefire in Gaza. Hezbollah, backed by Iran, claimed to have fired 320 Katyusha rockets at Israeli targets, describing this as the initial phase of retaliation for Israel's elimination of a high-ranking Hezbollah commander the previous month. While Israel's foreign minister Israel Katz stated that the country was not seeking a full-scale war, Israeli prime minister Benjamin Netanyahu issued a warning, suggesting that further action might be forthcoming. Houthis add to threats Adding to the regional tensions, Yemen's Houthi rebels, also supported by Iran, expressed support for Hezbollah's actions and reiterated their own threats against Israel. The situation in the Red Sea remains precarious, with the Houthis claiming responsibility for an attack on a Greek-flagged oil tanker, the Suexmax Sounion . This incident has not only raised shipping security concerns but also poses potential environmental risks in the area. The Houthis on 23 August posted a video of what they said was an explosion set off by its fighters on the Sounion , carrying 150,000t (1.1mn bl) of crude. The stricken tanker, which is adrift and unmanned, is "both a navigational and an imminent environmental hazard", according to the EU's naval force Operation Aspides, an EU defensive maritime security operation under the EU Common Security and Defence Policy. By Janet Ong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canadian labor board orders rail service to resume
Canadian labor board orders rail service to resume
Houston, 25 August (Argus) — Canada's two Class I railroads avoided a crippling extended work stoppage on Saturday, after an independent labor board upheld the Canadian government's order for the railroads to enter binding arbitration with a labor union representing more than 9,000 rail employees. The Canada Industrial Relations Board (CIRB), in two separate orders, directed the Teamsters Canada Rail Conference (TCRC) to enter binding arbitration with the nation's two Class I railroads — Canadian Pacific Kansas City (CPKC) and Canadian National (CN). The order heads off an extended work stoppage that would have echoed across North American supply chains for virtually all commodities, from crude, refined products, LPG and coal to fertilizers like potash, as well as consumer and industrial goods. Virtually all railed shipments carried by CN and CPKC came to a grinding halt early on 22 August after months-long talks between the railroads and the TCRC hit an impasse. Later the same day, the Canadian government stepped in to force parties into binding arbitration, but the TCRC said it would not abide by the directive without a ruling from the CIRB. In its rulings, the CIRB ordered CN and CPKC employees represented by the TCRC to resume their duties as of 12:01 am EDT on 26 August and remain "until the final binding interest arbitration process is completed". The CIRB also ruled that no further labor stoppages, including lockouts or strikes, could occur during the arbitration process, effectively voiding a TCRC strike notice issued on 23 August for CN workers set to take effect on 26 August. CN and CPKC said they will comply with the CIRB order, and CPKC asked TCRC employees to return to work on 25 August "so that we can get the Canadian economy moving again as quickly as possible and avoid further disruption to supply chains". The TCRC said it would comply with the CIRB decision, even though it sets a "dangerous precedent". TCRC plans to appeal the ruling in federal court. "The ruling signals to corporate Canada that large companies need only stop their operations for a few hours, inflict short-term economic pain, and the federal government will step in to break a union," TCRC president Paul Boucher said. "The rights of Canadian workers have been significantly diminished today." It could take weeks for Canadian rail operations to return to normal. CPKC said it could take several weeks for its rail network to fully recover from the work stoppage and even longer for supply chains to stabilize. Canadian railroads last week embargoed shipments of toxic materials and earlier this week stopped loading any new railcars. By Chris Baltimore Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
![Generic Hero Banner](/_next/image?url=%2F-%2Fmedia%2Fproject%2Fargusmedia%2Fmainsite%2Fimages%2F14-generic-hero-banners%2Fherobanner_1600x530_generic-c.jpg%3Fh%3D530%26iar%3D0%26w%3D1600%26rev%3D8ec86dce0f724687bd325a9a917cffae%26hash%3D9FD39B08C9D84A160C91A3649C40A186&w=3840&q=75)
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more