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Americas VLCC rates jump over 17% on increased activity after Saudi attacks

Houston — Americas VLCC freight increased more than 17% on US Gulf Coast-loading markets Monday following the attacks on Saudi oil production infrastructure, as bullish owners took advantage of tightened availability in the Americas and a volley of freshly opened cargoes and pushed freight to match strengthened global VLCC sentiment.

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Monday saw around eight cargoes working out of the USGC and East Coast Mexico-loading VLCC markets, as charterers tested uncertain waters after the strikes on Saudi Arabia's Abqaiq oil processing facility and the Khurais oil field shut down 5.7 million b/d of Saudi crude output and spurred crude and bunker rates to rise globally.

"The VLCC market was tightening before [the strikes] happened. There is a good 20 million barrels in tanks in the USGC and whoever owns it is looking for a profit now that supply in the Arab Gulf is down. I had four USGC/Mexico cargoes before 9 am this morning," a shipowner said.

VLCC freight began to see upward momentum early Friday morning with four cargoes heard opening and tonnage tight in the region for October loading dates. After the events of the weekend, Monday morning began with a burst of fresh cargoes. Charterers such as Unipec, Chevron, Equinor, Vitol, ATMI, Occidental, and Hyundai Oilbank were heard testing the USGC and East Coast Mexico-loading VLCC routes, with Motiva and an unconfirmed charterer having covered cargoes with discharges in South Korea.

A to-be nominated Bahri VLCC was placed on subjects at lumpsum $8.1 million loading 270,000 mt October 25-30, including $250,000 included for partial load at Moda's Ingleside terminal after Motiva booked the Maran Aphrodite for a USGC-South Korea run at lumpsum $7.5 million, to load October 22-25.

"It seems that every new fixture is up about $500,000 on the last one," the same owner said.

Freight for the 270,000 mt USGC-China route was assessed at $7.85 million Monday, increasing $1.15 million or over 17% day on day. Freight for VLCCs loading in Brazil and discharging in China was assessed at w65 Monday, increasing w7.5 or 13% day on day, despite a lack of fresh inquiry.

Activity out of the Arab Gulf continued after close of business in the region Monday, with market participants in the Americas pointing to an 19% jump for VLCCs on the 270,000 mt Persian Gulf-China route. A fixture was heard at the w65 level for the voyage, beating the last-done levels by w10, according to sources in the Americas.

The Americas Suezmax long-haul market saw freight bolstered by strengthening on the VLCC segment, with the 130,000 mt USGC-Singapore route assessed at lumpsum $4.45 million, an increase of $650,000 or 17%, after Phillips 66 placed the Front Coral on subjects for a USGC-Singapore voyage at lumpsum $4.45 million, to load October 7-8.

"That is a huge jump from last week. We will have to see how it plays out. I guess could be due to the Saudi strikes. There aren't as many cargoes [open] on the Suezmax side, I think the end-October barrels have been mainly VLCC," a Suezmax owner said.

A second owner said strengthening on the Suezmax segment was due in part to higher bunker prices, which shot up along with crude prices Monday.

Platts assessed Houston IFO 380 ex-wharf prices at $520/mt Monday, an increase of $97/mt or 23% higher day on day, and Houston MGO ex-wharf prices at $685/mt, an increase of $60/mt or close to 10% on the day.

-- Marieke Alsguth, marieke.alsguth@spglobal.com

-- Edited by Debiprasad Nayak, debiprasad.nayak@spglobal.com