Printer Friendly

PERSIAN GULF-EUROPE FREIGHT RATES SURGE.

Byline: _

An open arbitrage to move distillates west from the Persian Gulf and Red Sea to Europe has pushed up shipping rates on the major jet fuel export route, with the price for moving Long Range sized vessels spiking to $37.69/mt, its highest level since December 2012.

"There's not only jet on this route now, Saudi's are pumping diesel and that's also using the route. Basically more products coming out of the [Persian Gulf]," one source quoted as saying last week.

Since the start of the year, LR1 freight rates on the route have averaged $32.12/mt, up 7.2% from last year's average of $29.97/mt.

Opportunities to move distillates to Europe have been supported over the past month by a widening spread between the gasoil contracts underpinning the pricing of distillates in the markets East and West of Suez.

Middle East and Singapore distillate markets price at differentials to Singapore 500 ppm gasoil swaps, while European distillates price at differentials to ICE low sulfur gasoil futures.

This spread, known as the exchange of ICE gasoil futures for Singapore swaps, or EFS, moved to as low as $36.39/mt between front-month Singapore swaps and second-month ICE low sulfur gasoil futures last week, opening the arbitrage for moving distillate cargoes west.

COPYRIGHT 2015 Asianet-Pakistan
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2015 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Pakistan & Gulf Economist
Geographic Code:0INDI
Date:Jun 7, 2015
Words:216
Previous Article:SHIPPING NEWS - TANKER MARKET SENDING A BIG WARNING TO OIL BULLS.
Next Article:ASIAN LR1 PG-JAPAN FIXTURE HITS HIGHEST LEVEL.
Topics:

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters