Bunker fuel prices
Previously in this series, we noted that most of the crude tanker stocks rose in week 19, which ended on May 11. Average VLCC (very large crude carrier) rates dropped from the previous week and are again below $10,000. Suezmax rates also dropped in week 19. In this part of the series, we’ll see how bunker fuel prices fared in week 19.
Bunker fuel prices surged again in week 19 as President Trump announced his intention to withdraw the US from the JCPOA[1. Joint Comprehensive Plan of Action] Iran nuclear agreement.
On May 10, the average bunker fuel price was $487.50 per ton, compared to $464.70 per ton on May 3. According to Gibson’s report for week 19, bunker fuel prices at Rotterdam were $416.00 per ton on May 11, compared to $398.00 per ton on May 3. Bunker fuel prices at the Port of Fujairah rose to $440.00 per ton from $428.00 per ton on May 3.
Which companies were impacted?
Industries that transport commodities on ships incur bunker fuel costs. These industries include LNG (liquefied natural gas) carriers, product tankers, dry bulk carriers, and crude oil (DBO) tankers. Bunker fuel prices are closely related to oil prices.
Crude tanker companies that operate vessels in the spot market incur bunker fuel expenses. Of Tsakos Energy Navigation’s (TNP) 65 vessels, only 16 of the vessels operate in the spot market. Nordic American Tankers (NAT) has most of its fleet in the spot market. Of Nordic American Tankers’ 33 vessels, 28 vessels operate in the spot market.
Crude tanker companies record these costs as voyage expenses. In 2017, Euronav’s (EURN) voyage expenses represented 11.5% of its total operating expenses. In 2017, Teekay Tankers’ (TNK) voyage expenses represented 18.0% of its total operating expenses.