A very large crude carrier (VLCC) is available to load ultra-low sulphur 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.
