Saudi Arabia is preparing to unleash so much oil on the world that its own fleet can’t handle it all.
The kingdom’s National Shipping Co, also known as Bahri, has booked on a preliminary basis at least eight supertankers to load this month and next from Saudi Arabia’s main oil ports, according to people familiar with the matter, who asked not to be identified because the information isn’t public. The ships, each able to carry about 2 million barrels of oil, include Dalian, Agios Sostis and Hong Kong Spirit, they said. It’s not uncommon for preliminary bookings to fail.
Next month, the kingdom’s state-owned Aramco has pledged to supply a record 12.3 million barrels a day, 25% higher than in February.
“No one needs that much more oil and that’s why oil prices have collapsed,” said Peter Sand, chief shipping analyst at industry group BIMCO. “The current global supply increases isn’t being driven by demand growth, its mainly caused by producers.”
The flood of crude scheduled for next month will require more tankers, particularly for trips to Asia, Aramco’s largest market, said one person.
Bahri runs a fleet of 41 supertankers, making it among the world’s largest operators of the vessels, according to Clarkson Research Services Ltd. The carriers often transport the kingdom’s crude and have, in recent years, meant the kingdom didn’t need to rely on outside companies to haul its barrels to the Gulf of Mexico.
Supertanker rates for Middle East-U.S. Gulf Coast route jumped by 57%, according to data compiled by Bloomberg. Daily earnings rose to $50,071 a day, almost triple from Monday, according to Baltic Exchange data. Rates were already on the way up as companies sought ships to use as floating storage.