The rates are depressed, and new buildings coming out, putting more pressure on the rates.
Maersk is trying to delay delivery of new tankers, and even trying to get a price cut on orders placed for new buildings.
The tanker market was the one "bright spot" in international shipping, but it too has gone.
As with everything, until the supply more closely matches the demand, the rates won't be very good. Some are considering lay-up, but apparently with tankers, that becomes problematic due to recertifications which must be obtained to carry oil.
Ship owners are contributing $703 a day toward fuel costs to ship Middle East crude, 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.”
The Organization of Petroleum Exporting Countries 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 3.20 kroner, or 2.5 percent, to 132.70 kroner as of 2:46 p.m. in Oslo, valuing the company at 10.3 billion kroner ($1.7 billion).
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