Freight rates for Aframax tankers to Asia have reached their highest level so far this year, as China’s small refiners received new crude import quotas and as Asian refiners are hastening to hire ships to transport more crude oil from the Middle East to Asia in view of dwindling supply from Iran, market participants tell S&P Global Platts.
Demand for Aframaxes has increased in recent months amid higher oil supply from Saudi Arabia and Russia and the freshly issued import quotas for China’s independent refiners—the so-called teapots—which are larger than before, S&P Global Platts quoted Ole-Rikard Hammer, an Oslo-based senior analyst with Arctic Securities, as saying in a report.
According to a Platts source with an owner of an Aframax, the current supply of good ships is tight, and special requirements at some Asian load ports have further tightened the Aframax market.
Over the past three months, tanker tracking data suggested that Iran’s crude oil and condensate exports started to drop considerably in August, and the slump continued through September. According to preliminary tanker tracking data compiled by Bloomberg, observed exports of Iranian crude oil and condensate plunged in September to 1.72 million bpd, down by 260,000 bpd month-on-month and the lowest level since February 2016.
At the same time, China has raised by 42 percent the oil import quota for its non-state refiners—most of which are the independent refiners—for 2019 as new refinery capacity is planned to enter into operation next year. China is allocating a total of up to 202 million tons, or 4.06 million bpd, in import quotas to non-state refineries for next year, S&P Global Platts reported earlier this month, citing a communication by the Chinese Commerce Ministry. Companies have until November 10 to apply, and those who haven’t imported crude oil in 2018 will not be allocated quotas for next year, the ministry noted.
News Source: Link