By the OGJ Online Staff
HOUSTON, Nov. 12 -- Poten & Partners said that the Organization of Petroleum Exporting Countries' proposed output quota cut does not bode well for very large crude carrier rates already experiencing low rates.
Spot VLCC rates are between $30,000 and $32,000/day, while time-charter rates are about $31,000. At the beginning of the year, both rates were about $48,000/day, said Poten, an oil tanker and liquefied gas carrier broker and consultant.
OPEC output is a main driver of demand for VLCC rates -- Poten said that OPEC production can explain 80% of the variation.
The consultant predicts OPEC production will continue to decline, though lowering production may encourage competition from non-OPEC countries. "The only thing that can preserve OPEC export volume is an expanding global economy, and that's not currently in the cards."
The consultant also said a critical factor is the number of VLCCs that can call on the Persian Gulf within 30 days. Demand for tankers' services determines day rates.