The US sanctions on tankers belonging to state-backed Cosco and Kunlun have created a fleet of “untouchable” VLCCs, the president of Intertanko has warned, sending rates ever closer to six-digit territory.
Washington slapped sanctions on the two Chinese firms late last month for their handling of Iranian crude oil, sparking instant turmoil in the tanker trades.
The head of Intertanko, Paolo d’Amico, interviewed by Il Sole 24 Ore, an Italian national daily business newspaper, said: “At the moment, there is a lot of confusion, everyone is terrified of ending up being hit by sanctions. The result is that there are around 50 VLCCs considered untouchable.”
This figure equates to nearly 6% of the world’s VLCC fleet becoming in the words of one Singapore broker contacted by Splash “toxic overnight”.
The sanctions in place – and the nebulous links between Cosco’s other maritime divisions – have spooked the Chinese giant’s business partners in areas beyond the Dalian tanker subsidiaries targeted by the Trump administration.
“Right now, it’s not fundamentals that drive the market, it’s all geopolitics and massive uncertainty about what happens next,” Peter Sand, BIMCO’s chief shipping analyst told Splash yesterday, adding: “Any charterer who is desperately trying to de-risk fast, from the current high risk environment – is likely to end up paying top-dollar for it.”
In a note to clients, Michael Webber, formerly with Wells Fargo and now the founder of his own eponymous research outfit, wrote that the timing of the Cosco sanctions could not have got much better.
“We believe the current set of structural tanker dynamics are among the strongest in a decade,” Webber noted.