US refiner Phillips 66 shipped crude from the US Gulf coast to the US east coast on a foreign-flagged ship in late April, marking at least the second time the refiner has utilized a Jones Act waiver for crude since the start of the waivers in March.
The Aframax Front Altair discharged approximately 596,700 bl of West Texas Intermediate crude at the 258,500 b/d Bayway refinery in New Jersey on 13 May after loading it from a terminal in Beaumont, Texas on 29 April.
Phillips 66 in early April used a foreign-flagged Panamax vessel to move Bakken crude on the same route taken by the Aframax, the likely first instance of the company utilizing a waiver.
US president Donald Trump approved the Jones Act waivers on 17 March, easing domestic shipping requirements for US-US shipments to attempt to offset surging commodity prices caused by the US-Israel war with Iran. His administration has since extended the original 60-day waivers, set to conclude on 17 May, for an additional 90 days terminating on 16 August.
The waivers allow shippers to transport crude, natural gas, natural gas liquids, fertilizer, coal and other energy-related products from one US port to another without using US-built, US-crewed and US-flagged ships, as the 1920 Jones Act requires.
Demand for refined products shipments via Jones Act waiver deals has outstripped crude demand since the program's inception. Major US refineries are typically pipeline fed when the supply is already domestic, benefiting only in fringe cases where a seaborne shipment can bypass some obstacle in that delivery system or otherwise work out to a cheaper $/bl rate.
But places like California and Hawaii, where refinery capacity is low, have demonstrated stronger comparative demand for Jones Act waiver shipments of refined products. This demand is set to rise after international clean tanker rates loading in the US Gulf coast collapsed from mid-April on an influx of displaced Pacific tonnage post-war.
The time charter equivalent rate for a US Gulf coast-Caribbean voyage, which represents the return a shipowner might expect per day, dove from an all-time high of $116,300/day on 14 April to -$688/day on 14 May. The latter rate suggests vessel operators might lose money on this voyage at current rates, but that would be less of a loss than allowing the vessel to rack up operating costs while remaining uncontracted.
