* MidEast tanker bookings soar, producers chase market share
* VLCC tanker rates surge 50% on MidEast-China route
* Elevated rates nearing unsustainable levels -source
By Roslan Khasawneh
SINGAPORE, March 12 (Reuters) - The cost to ship oil on super-tankers soared on Thursday as major producers scrambled to secure vessels to ship more crude in a bid to regain lost market share and buyers took advantage of plunging prices.
Freight charges to ship oil in very large crude carriers (VLCCs) from the Middle East, home to the largest OPEC producers, to China, the world’s top crude oil importer, nearly doubled overnight.
VLCC tanker rates along the busy Middle East Gulf to China route jumped to about $160,000-$180,000 per day on Thursday, up from about $70,000-$100,000 per day on Wednesday, according to several ship broking sources.
Just one month ago, the same rate was at about $20,000-$30,000 per day, the sources said.
“The sheer scale of the activity has taken many by surprise,” said one ship broker, who declined to be named due to company policy.
The frenzy comes after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, failed to reach an agreement for deeper production cuts to support prices hit by the coronavirus outbreak and instead threatened to ramp up supply, sending global oil prices plunging.
At least another 13 VLCC tankers were provisionally booked to load crude oil from the Middle East to Asia on Wednesday, slightly down from the 19 ships provisionally booked on Tuesday, the sources said.
This compared to about 4-5 bookings a day made in the same period last month.
Such is the demand that Saudi Aramco on Thursday rejected at least three Asian refiners’ requests for additional April-loading crude oil despite its pledge to ramp up production.
Crude prices have fallen over 50% since their highs in January, raising expectations that some oil could go into storage on board tankers.
But as rates soar and demand for fuels tumbles in the shadow of the economic fallout from coronavirus, the option of storing the growing supply of crude oil on super-tankers is becoming less economical, shipping sources said.
“In this weak demand environment, we are very close to levels where the current freight rates become unsustainable, if they aren’t already,” the ship broker said.
Saudi Arabia’s National Shipping firm, Bahri, this week tentatively chartered as many as 14 super-tankers to ship crude oil to customers worldwide, as the Kingdom made good on its promise to boost crude oil output.
The bookings by Bahri are in addition to its own fleet of 42 VLCC’s, the sources said.
The United Arab Emirates followed Saudi Arabia on Wednesday in promising to raise oil output to a record high in April, as the two OPEC producers raised the stakes in a standoff with Russia that has hammered global crude prices. In February, freight rates plunged nearly in half as the spreading coronavirus hit demand for crude oil in China, the world’s top importer, and after the U.S. partially lifted sanctions on one unit of Chinese shipping firm COSCO.
Reporting by Roslan Khasawneh, Shu Zhang and Jessica Jaganathan; Editing by Richard Pullin