Storm clouds persist for oil-tanker owners

A collapse in day rates for the world's fleet of crude carriers will be exacerbated this year as a large number of new vessels hits the market

Oil tanker owners face another tough year. With day rates sinking to new lows in the first weeks of 2011, a modest increase in demand forecast for the coming months is unlikely to offset the dampening effect of new tonnage coming on to the market. The average day rate for very large crude carriers (VLCCs) on the benchmark long-haul route from the Middle East to Japan sank to around $18,500 in December – the lowest December figure for at least a decade – and continued to slide to below $15,000 a day in mid-January. Even the $31,500/d average for 2010 as a whole was a far cry from the heady days of 2008, when owners could expect to receive $85,000/d for VLCCs (see Figure 1). "Despite the incre