Freight rates to carry a 55,000 mt clean petroleum cargo from the Mediterranean Sea to Japan on an LR1 tanker have sunk to a 22-week low of $29.09/mt, on an extended period of long delays through the Turkish Straits.
LR1 rates have fallen 30% since the start of the year, S&P Global Platts data showed.
Long delays through the Turkish Straits for vessels longer than 200m have led to a sharp decrease in rates for LR tankers. Delays stand at 14 days northbound and 12 days southbound, down from 20 days at the end of January.
Clean petroleum product cargoes heading to the Asia-Pacific region from the Black Sea are usually loaded on LR1 tankers or LR2 tankers, with 80,000 mt capacity. The majority of these cargoes are naphtha, loaded from Black Sea refineries.
Charterers have in recent weeks favored instead loading cargoes onto MR tankers, with 37,000-40,000 mt capacity, and sending them east or transshipping the cargo in the Mediterranean onto an LR2 tanker.
Demand for LR1 tankers has fallen as a result, squeezing rates.
Lower product flows east are also responsible for the falling demand, market participants said.
“The naphtha arbitrage opportunity is also shut,” an LR tanker shipbroker said.