October 1, 2019 / 9:53 PM / 5 months ago

CORRECTED-Oil shipping rates from U.S. to Asia hits 3-year high, quieting Nov trade -sources

(Corrects number of units of China's COSCO under U.S. sanctions to two, not four, in paragraph 2)

By Collin Eaton and Devika Krishna Kumar

HOUSTON/NEW YORK, Oct 1 (Reuters) - Freight rates for U.S. crude tankers bound for Asia were bid up to a more than three-year peak this week as U.S. sanctions on a Chinese transport giant cut vessel availability, traders and ship brokers said.

The United States last week imposed sanctions on two units of China's COSCO, which operates more than 50 supertankers, alleging the units violated U.S. sanctions on Iran. That action prompted U.S. Gulf Coast exporters to hold back chartering COSCO-owned vessels, traders and shipbrokers said.

This week, suggested rates for Very Large Crude Carriers (VLCCs) from the U.S. Gulf Coast to China vaulted to $9.8 million, up from $6.2 million in early September, according to ship broker McQuilling Services. VLCCs carry around 2 million barrels apiece.

"To attract a ship to ballast (into the Atlantic market) it's going to cost about $10 million" for U.S. Gulf Coast shipments bound for China or South Korea, said another U.S. shipbroker who brokers about 20 vessels per month.

Friday's highest quote was for $9.5 million to book a VLCC from the U.S. Gulf Coast to China for charterer Atlantic Trading & Marketing, a unit of Total SA, shipbrokers said. The deal did not go through, they added. Atlantic Trading declined to comment.

No other transactions for supertankers from the U.S. Gulf Coast to Asia have been executed this week, shipbrokers said.

The surge in freight costs has narrowed the window to profitably export U.S. crude to Asia and left some U.S. crude exporters reluctant to book vessels at the higher rates. That could limit November loadings and exports unless more vessels become available in coming weeks, traders said.

"People are nervous about locking freight in at these high levels, which is why the last week has been so quiet," one U.S. crude oil trader said.

Occidental Petroleum Corp last week replaced a COSCO-operated supertanker, Coswish Lake, following the U.S. sanctions, by chartering smaller vessels from Texas to destinations in Asia, shipbrokers said.

The Coswish Lake had anchored off Corpus Christi, Texas, since Sept. 23 and departed on Sunday without loading crude, according to Refinitiv Eikon data.

Occidental did not respond to requests for comment. (Reporting by Collin Eaton in Houston and Devika Krishna Kumar in New York; additional reporting by Florence Tan in Singapore and Noah Browning in London; Editing by Lisa Shumaker)

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