Tanker Tales  

Bloomberg had an interesting article a little while ago on the largish fleet of oil tankers hanging around in the Persian Gulf that Iran is using to store crude in - Iran Ships Can Hold Months of Saudi Oil Pledge.

Iranian supertankers now in the Persian Gulf could store the equivalent of five months worth of the additional crude oil Saudi Arabia pledged to pump to curb prices, according to ship-tracking data compiled by Bloomberg.

Saudi Arabia said it would increase production by 200,000 barrels a day in July, after a summit of leading oil producers and consumers in Jeddah yesterday. Saudi Arabia and Iran are the OPEC's two largest oil producers.

Iran has 13 to 15 supertankers idling in the Gulf with capacity to hold as much as 30 million barrels, the ship-tracking data shows. Iran has not said how much oil is in the tankers. Hojatollah Ghanimifard, executive director of international affairs at National Iranian Oil Co., said June 2 that some vessels were storing crude while refineries carried out annual repairs.

The chart of the day lists 16 Iranian ships, of which 13 are idling either at the country's Kharg Island oil loading facility or the nearby Soroosh Terminal, according to AISLive data on Bloomberg. The signals of two other vessels at the facilities were tracked last week. Each supertanker has the capacity to store about 2 million barrels of crude.

Ghanimifard said that the ``number of vessels will decrease by the end of June,'' as refineries that can process Iran's sulfur-rich crude reopen after maintenance.

Paul Kedrosky notes that if there is an oversupply of oil, then for evil speculators to push prices up they'd need to hoard it - however he doesn't think that is what is actually happening - Oil? No Oil Here. Oh ... You Mean _That_ Oil!.

While many people are focused on the silly idea that speculators (the von Trapps!) are the primary cause of current oil market advances, what if a more useful thing to think about was hoarding? What hoarding, specifically? Well, there are those supertankers hanging around in the Persian Gulf.

According to Bloomberg, there is currently tanker capacity of at least 30-million barrels parked off the Iranian coast. That is about five months worth of the proposed Saudi boost to crude supplies.

Bloomberg has an update on the story today, noting the Iranian holding fleet is shrinking - Frontline Income at Risk as Record Oil Hits Shipping.

The tanker fleet's capacity will increase 18 percent to 432 million tons of oil by the end of 2010, according to London-based shipbroker Simpson, Spence & Young Ltd., whose data is used by the IEA for shipping analysis. Oil demand will expand 2.7 percent during that time to 89.2 million barrels a day, the Paris-based IEA said July 1.

Frontline expects less growth in capacity. Jens Martin Jensen, interim chief executive officer, told investors May 22 that 120 so-called very large crude carriers will join the fleet, while about 100 single-hull ships are phased out because they don't meet new standards of environmental protection. ``We will actually see a rather undramatic fleet growth,'' he said. ...

Profits from supertankers, which are bigger than the Chrysler Building and haul about a fifth of the world's oil, will drop 15 percent to $100,000 a day in the second half, based on the median estimate from the 13 analysts and brokers. In 2010 rates will plunge to about $67,000 a day, according to data from Imarex ASA in Oslo, a freight-derivatives brokerage.

The number of ships competing for cargoes may also swell in the next two months because Iran, OPEC's second-largest oil producer, is freeing up supertankers that it's using to store crude in the Persian Gulf, Chiu said.

The National Iranian Tanker Co. cut the number of idling ships to 11 from 15 in the last two weeks, Bloomberg data show.

Use of vessels for storage helped tanker rates more than triple since April, delivering rental income of almost $196,000 a day for Frontline, Overseas Shipholding Group Inc. and Euronav NV, according to prices from London's Baltic Exchange and a formula from Oslo-based shipbroker RS Platou A/S.

Available Supertankers

There are 71 supertankers available for hire in the next 30 days, up from 63 a month ago, estimates broker Barry Rogliano Salles in Paris.

To be sure, the Organization of Petroleum Exporting Countries is pumping more than ever before, bolstering demand for ships, Bloomberg estimates show. ``All the extra oil that comes out of the ground will go to Asia,'' said Andreas Vergottis, research director at Tufton Oceanic Ltd., the world's largest shipping hedge fund.