Supertankers may halt oil trading, Frontline says

Supertanker owners may start refusing cargoes within the next three months unless rates return to a profitable level, said Frontline Ltd., the biggest operator of the ships which carry almost half the world’s oil.

Ship owners’ income after fuel costs from shipping Middle East crude is a negative $703 a day, according to the London- based Baltic Exchange. Rates have been below operating costs since July. Should the losses persist, some owners may choose to idle their ships, according to Jens Martin Jensen, Singapore- based chief executive officer of Frontline’s management unit.

“If you see another quarter, then I think owners have to do something,” Jensen said by phone today. “We are subsidizing oil companies.”

OPEC has cut output by 4 percent this year to 28.4 million barrels a day, according to Bloomberg estimates. Over the same period, the fleet of in-service supertankers has advanced 5.8 percent to 528 ships, according to Lloyd’s Register-Fairplay data on Bloomberg.

The five-member Bloomberg Tanker Index, led by Frontline, dropped 19 percent this year, extending last year’s record 49 percent slump. Frontline rose 2.40 kroner, or 1.9 percent, to 131.90 kroner as of 1:35 p.m. in Oslo, valuing the company at 10.3 billion kroner ($1.7 billion).

Tags:  oil trading