Shipowners in the Mediterranean and Black Sea basins have begun charging higher premiums for voyages due to bad weather and delays in the Turkish Straits.
Dirty tanker handysize Black Sea-Mediterranean rates have been trading at a near 10-month high, as have cross-Mediterranean rates.
The former journey traded at 215 worldscale points this week, its highest since January 5 when it was assessed 0.75 point higher. Shipowners have been asking for W200 for the latter journey, also the highest since January 5 when it was assessed at W209.75, S&P Global Platts data showed.
A broker report noted 12-24 hour delays at the Dardanelles for Northbound passage and 24-36 hour delays in the Bosporus.
For the Southbound passage, 12-24 hour delays were reported at both locations.
Large vessels such as Aframax’s, Panamax’s and Suezmax’s in the Dardanelles were facing delays of 4-5 days Northbound and 3-4 days Southbound.
Expensive freight on the large class vessels could have filtered through on the smaller ones, prompting the surge. Alternatively, if delays for larger class vessels are severe, market participants with oil to move could charter smaller ones, increasing prompt spot demand and therefore freight rates.
“There are Turkish Strait delays and world scale rates are insane,” one feedstocks trader said.
“Apparently there are a lot of cargoes and not many ships around,” a fuel oil trader said.
Traders have said cargo availability had risen over the last week, slowly easing the consistently tight fuel oil complex of the last six weeks.
“I see the Med getting heavy as we get into December on fuel with a couple of M100 cargoes moving into the Med plus extra RMG production,” another fuel trader said.
Weather in the Mediterranean and Black Sea tends to deteriorate in the winter compared to the summer, so freight rates tend to always be higher in November and December.
Stormier conditions lead to delays and make general operations more difficult, so owners respond by asking for higher premiums. In the products carried by dirty tankers — namely fuel oil, crude oil and feedstocks — more expensive freight has increased CIF premiums over FOB. As oil products generally trade on a CIF basis, this has increased the overall costs of what is trading in the region and handed an advantage to oil loading in the Black Sea which typically trades on a FOB basis.