Eighth Europe-Bound Jet Fuel Tanker Diverts around the Cape
Tanker STI Alexis has become the eighth Europe-bound vessel in four weeks to ship jet fuel via the longer route around the Cape of Good Hope from the Middle East and Asia.
The Long Range 2 tanker, which loaded the reported 90,000-metric-ton cargo of jet fuel from Saudi Aramco's Jubail refinery on July 14, is now heading south in the Indian Ocean, bypassing the Gulf of Aden and thus a Suez Canal transit.
The voyage around the Cape can take up to 14 to 20 days longer than the conventional month-long route via the Suez Canal through which most middle distillates from Asia, India and the Middle East sail to Europe.
Seven other LR2 tankers are currently sailing around the Cape, a trade flow rarely seen unless the arbitrage or floating storage economics of a contango market, or high stocks in the Amsterdam-Rotterdam-Antwerp region make it profitable or necessary
Shell, Total, Vitol, Castleton and Cepsa are among oil companies and traders who have opted to ship jet fuel via the Cape in the past four weeks (see list). Shell has three of the vessels, or 270,000 metric tons on the water, equivalent to about 15% of Europe's average monthly imports.
The spot price for jet fuel in northwest Europe is currently about $35 per ton lower than the October-through-December paper value OPIS calculations suggest. Jet fuel in independent storage in the ARA region is currently at about 5 million bbl, nearly 49% above the five-year average, according to BNP Paribas, citing data from PJK International.
The phenomena of Cape jet shipments was last seen in February and March, with the additional sailing time allowing traders time to find a buyer or storage spot, or take positions in the futures market that allowed them to profit from the higher-priced, later delivery date.
Vessels tracked by the OPIS Tanker Tracker include:
--SKS Darent (90kt, Shell) - Shellhaven in two weeks;
--Torm Marie (90kt, Shell) - Shellhaven in two weeks;
--Zaliv Vostok (80kt, Total);
--SKS Douro (90kt, Vitol) - Rotterdam in 12 days;
Dubai Brilliance (90kt, Castleton) - last signaled Le Havre end July;
--Nord Sakura (40kt, Cepsa);
--Front Panther (90kt, Shell) - Shellhaven in seven days