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Tanker Shipping & Trade

Tanker Shipping & Trade

Arbitrage opens up for VLCC crude oil cargoes from US to Europe

Thu 10 Jan 2019 by Craig Jallal, tankers and markets editor

Arbitrage opens up for VLCC crude oil cargoes from US to Europe
Europe receives the first-ever VLCC crude oil cargo from the US

According to VesselsValue and other sources, the first-ever VLCC cargo of US crude oil exported to Europe is currently being discharged in Rotterdam.

A former Olympic Shipping and Management VLCC, Nasiriyah (ex-Olympic Lady) is discharging Permian Basin crude oil which was loaded in Texas on or around 18 December (see tracking above).

The Permian Basin crude oil was loaded at the Moda Ingleside Energy Center near Corpus Christi, Texas. Moda purchased the facility from Occidental Petroleum and expects to export another five VLCC cargoes of crude oil to Europe by the end of January.

Last year saw several US crude oil export facilities developed including Buckeye Texas Hub and Jupiter Export Terminal.

According to analysts, Permian Basin crude oil is normally exported to Europe on Aframax tankers but the increase in rates in that sector and lower VLCC rates opened an arbitrage for traders to lift a VLCC cargo (2M barrels) instead of the normal 500,000 barrels via Aframax, saving US$2M on the equivalent charters for four Aframaxes.

2017-built Nasiriyah is one of a pair of Olympic Shipping VLCCs on charter to Al-Iraqia Shipping Services & Oil Trading and was the first VLCC to load at Ingleside. Due to the depth of water, it is only able to load 1.2M barrels with the remainder of the cargo lightered in the Gulf.

Business, operational and technical issues impacting the crude, product and chemical tanker trades will be discussed at the Asian Tanker Conference in Singapore in February.

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