Pirate Attacks Fail to Revive Tanker Rates as Oil Demand Slows

Oil shipping costs may extend this year’s 76 percent rout as shrinking energy demand and a global recession eclipse disruptions caused by pirates off east Africa capturing their largest-ever freighter.

Tanker rates next month are about 7 percent lower than yesterday’s level on the Persian Gulf to Japan route, according to derivative contracts called Forward Freight Agreements that trade privately among banks, brokers, hedge funds and shipping companies. Transport costs plunged this year as OPEC curtailed production, lowering demand for vessels.
“It would be too strong to say it would become a huge constraint” to vessel supply, Andreas Sohmen-Pao, chief executive officer of BW Shipping Managers Pte., which controls 17 supertankers, said from Singapore Nov. 20. “It would reduce capacity, but not to an alarming level.”

Bloomberg