Asian Buyers Shift to African and Brazilian Crude as Freight Costs Ease

Sinopec’s trading arm, Unipec, bought two cargoes of Djeno crude from Congo at a discount of about $22 to dated Brent, two traders told Reuters. South Korea’s SK Energy provisionally chartered a Suezmax tanker to carry crude from Gabon to Ulsan in December, the news agency reported, citing unnamed traders, shipbrokers and analysts.

Chinese buyers are also showing interest in Angolan crude as Russian ESPO trades at a rising premium, analysts at Energy Aspects said. The firm attributed the appeal of grades shipped west of the Suez Canal to softer long-haul rates for very large crude carriers, or VLCCs.

VLCC freight rates have fallen 50% from October highs, after reaching records last month and then retreating as buyers pulled back. Rates for Suezmax and Aframax tankers have also dropped sharply. Vortexa shipping analyst Wanying Zhang told Reuters the correction followed improved vessel availability after October’s unusually tight market. The number of laden mainstream VLCCs and Suezmaxes in East Asia has risen by about 15% since early September, she said, expanding the pool of ships that could become available after unloading.

Rates surged this year as Middle Eastern producers used ship-to-ship transfers outside the Strait of Hormuz. Shuttle tankers, including smaller vessels, moved oil through the strait before it was transferred to supertankers in the Gulf of Oman. Supertanker rates from the Gulf to Asia reached $1.4 million per day in October before falling.