(Ocean Freight Exchange) – Aframax Cross-Med freight rates saw a sharp spike last Friday, nearly doubling from w80 to w140 in a day. Rates have remained firm at w140 ever since on the back of a combination of factors-
Crude Oversupply in the Med
Surging production in the region has boosted exports, lending support to the tanker market as more barrels
look for homes. Key exporters in the region are pumping more oil than ever, with Russian production
setting a new post-Soviet record at 11.2 mmb/d in October and Libya returning to the market. The start-up
of Kazakhstan’s massive Kashagan oil field has led to an increase in CPC Blend exports, up from 600 kb/d
to 1 mmb/d in October. With exports from Kashagan and Filanovsky oil fields ramping up and Libya’s
largest port Es Sider poised to resume exports in days, the Med crude market is likely to remain vastly
Increase in Floating Storage
As excess volumes in the region fill up onshore storage sites, oil companies have turned to floating storage
as an option. There are up to 20 Aframax vessels storing crude in the region, potentially adding up to 12
mmb at sea. This has reduced the list of tonnage available. The steep contango in ICE Brent prices may
further incentivize charterers to book more vessels for floating storage despite the spike in freight rates.
The Brent M1-M2 spread widened to $1.18/bbl last week, currently holding at $1/bbl.
Recent storms in the Black Sea have caused longer vessel delays of up to 4-5 days, further boosting
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