Updates with comments from US State Department
Oil traders in the Americas canceled bookings of tankers operated by Chinese shipping giant Cosco and scrambled for replacements following the imposition yesterday of US sanctions on two Cosco subsidiaries.
The surge in demand for replacement tonnage in the Americas caused very large crude carrier (VLCC) rates on the US Gulf coast-China route to jump by 19pc to $9.6mn lump sum, the highest rate on the route since Argus began the assessment in November 2017.
This follows a spate of cancellations of Cosco tankers in the Mideast Gulf that caused a similar rate increase.
The US Treasury Department placed on its sanctions list yesterday a handful of Chinese shipping companies, including Cosco subsidiaries Cosco Shipping Tanker Dalian and Cosco Shipping Tanker Dalian Seaman and Ship Management, citing their involvement in the Iranian oil trade.
Even though the US today clarified that the sanctions do not target parent company Cosco Shipping, the group's opaque ownership structure, a common attribute of global shipping companies, caused confusion among charterers as to which of Cosco's 151 tankers were under sanctions.
US officials did not appear to be aware of the effect the Cosco sanctions have had on the tanker market.
While "there was a lot of alarm at the outset" regarding potential ramifications, "I think they just have not borne out," a senior State Department official said today.
The official had seen no reports of "potential harm, ripple effects" in the shipping industry.
Cosco Shipping Americas did not immediately reply to a request for comment.
Shipbrokers said that at least three Cosco-operated VLCCs were dropped from scheduled loadings of US crude. This led to several traders securing tonnage located as far away as north China as replacements, according to one shipbroker.
US producer Occidental Petroleum dropped its booking of the Cosco-operated Coswish Lake VLCC to load at Corpus Christi Ingleside, and booked one Suezmax, the Stena Supreme, and sought a second one to carry the cargo, according to a shipbroker.
Occidental did not immediately reply to a request for comment.
