Shipping brokers all over the world engulfed with calls from oil traders looking for replacement ships. The U.S blacklists dozens of tankers operated by a major Chinese tanker operator.
About 50 tankers hit over allegations of the U.S that the vessels tied to illicit shipments of Iranian crude. A subsidiary of COSCO Shipping Energy Transportation operates the 50 tankers. The company is one of the world’s largest tanker owners that moves a big part of China’s oil needs.
Moreover, Washington also advised ports and traders around the world to stop doing business with the Chinese ships.
Brokers from Singapore said since the announcement, the company’s phones haven’t stopped ringing as traders look for alternatives.
After the attack on Saudi Arabian facilities, it raised concerns over crude supplies and sent shipping rates rising. Because of this, a movement to find new vessels has helped spur a new round of price increases for oil transport.
Since the start of the week, rates for VLCC raised to 18% higher. It fixed at $45,000 a day.
Western charters will probably avoid COSCO vessels because of the sanctions of the U.S. Also, this means tightening of the vessel supply, according to Clarksons Platou Services.
Furthermore, CSET halted trading of its shares in Hong Kong on Thursday. Also, the company said in a Friday filing, it is checking some significant issues, and suspended shares.
On Wednesday, the Trump administration blacklisted several Chinese companies. Cosco Shipping Tanker (Dalian) Seaman & Ship Management Co and CSET units Cosco Shipping Tanker (Dalian) Co. and includes the list of companies.
VLCC Services chartered as a replacement by a Chinese oil company that had earlier booked Cosco Dalian tankers.
Shipping Brokers after Cosco Tankers Ban
The state-owned Cosco Shipping Group is a vital part of Beijing’s multitrillion-dollar “Belt and Road” initiative. It aims to establish infrastructure and distribution channels to help extend China’s influence around the world.
China’s Unipec is an arm of refining giant China Petroleum & Chemical Corp., which replaced at least three oil cargoes from Cosco ships.
A Greek owner said it’s a good business with a virtually out player when oil demand is up. Also, they have inquiries from the biggest oil companies’ cargoes.
Brokers have seen more than a dozen ship switches involving big oil cargoes.
CSET’s $66.11 million net profit, Cosco Dalian contributed 39% in the first half. It said some of Dalian’s vessels are subject to the American sanctions, according to Huatai Research.
Besides, Huatai is concerned about the potential risks and consequences of being blocked from American banks, although the Cosco Shipping is not on the list. Also, the company is the heart of the global financial system and blocked access to banking transactions, or vessel insurance could impact the overall company.
Moreover, Cosco is asking Beijing to make the blacklisting decision part of the U.S-China trade talks. As a direct punch at the Beijing government itself, senior communist party members considered sanctioning.
Cosco said they are surprised and planning to learn more about the situation.
- Trading Instrument