US Fuel Crisis Sparks Refiners to ‘Smash and Grab’ Tankers
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Oil tanker charter rates skyrocketed in the U.S. with refiners scrambling for ships to store fuel that has nowhere to go due to a cyberattack on the country’s main pipeline.
Companies such as Marathon Petroleum Corp, Valero Energy Corp and Phillips 66 were in the process of chartering several oil tankers for floating storage, according to shipbrokers that asked not to be identified. Ships can serve as offshore tanks during unexpected oversupply situations, such as last week’s shutdown of the Colonial Pipeline that halted fuel flows from refineries to customers along the East Coast.
“There’s no longer a market,” shipbroker Simpson Spence Young said in a May 10 report. “[It’s become] a smash-and-grab scenario with charterers focusing on securing tonnage.”
Evan Vucci/Associated Press
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Close to a dozen tankers of different sizes also were provisionally booked or fixed to move so-called clean petroleum fuels such as gasoline and diesel from the Gulf Coast to destinations trans-Atlantic, or to other regions such as the Caribbean, Far East and also Brazil, according to the report. The flurry of interest sent rates soaring May 10, extending a spike in activity seen late May 7.
The shutdown of the Colonial Pipeline has caused supply dislocations across the Gulf Coast, as well as the northeastern and southeastern U.S. Rising stockpiles are prompting refineries along the Gulf Coast to snap up tankers for floating storage and exports — with some mulling run rate cuts — even as fuel flows from Europe rise opportunistically into the Atlantic Coast.
The widely referenced TC-14 route for medium-range tankers from the U.S. Gulf Coast to European Continent climbed 54% to 140 worldscale points May 10. The TC-18 route from Gulf Coast to Brazil also surged, according to SSY. Vessels being considered for floating storage were provisionally booked on short-term time charters at between $20,000 to $30,000 per day.
MR- and LR-size tankers can transport up to 40,000 tons and 90,000 tons of clean petroleum fuels, respectively.
— With assistance from Serene Cheong.
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