Traders are slated to load record volumes of diesel on verylarge crude carriers (VLCCs) from Asia to West of Suez markets in August, a trend most likely to continue next month, data from trade sources and shiptrackers revealed.

Five supertankers - Maran Leo, Sea Lion, Nissos Keros, Nissos Nikouria and Atherina - filled 9 million barrels or more of diesel from the Middle East and India, bound for European and African markets, a level hidden on VLCCs in the 7 years given that such data has been tracked, according to Kpler shipping information and two trade sources.

Traders are using VLCCS to carry refined fuels from the Middle East and India to markets to the west due to the fact that of a cost advantage in dirty tanker freight rates versus clean tanker rates, stated LSEG Oil Research study experts in an e-mail.

The 5 vessels were chartered for August by trading units for Abu Dhabi National Oil Company (ADNOC) and TotalEnergies , and major trader Trafigura, the information showed.

ADNOC and Trafigura both declined to comment. TotalEnergies did not react to an ask for comment.

The switch to VLCCs for diesel shows weaker-than-usual Asian unrefined demand, particularly from China, making the huge ships offered to pack other freights, a Singapore trade source stated.

Diesel is typically continued medium- or long-range ships with capacities of 300,000-700,000 barrels, while VLCCs can carry around 2 million barrels of crude.

The Atlantic Basin diesel market has actually become very competitive, so for East of Suez players economies of scale are more vital than ever and this is where VLCCs come into play, stated Vortexa's chief economic expert, David Wech.

Freight costs to charter VLCCs - leaving out cleansing costs - on the Middle East-Europe route were at $10 per lot, compared with tidy tanker costs at around $50 per lot on a comparable path, LSEG and SSY Tanker data showed.

SEPTEMBER LOADINGS This shift to VLCCS started as early as June and is continuing in spite of earlier expectations that it would slow.

The deliveries will alleviate an Asian supply excess and help cushion near-term market weak point, 3 trade sources said, including that they will likewise cover West of Suez supply shortfalls ahead of seasonal refinery maintenance and winter peak need.

European refineries are set to take a total of 900,000 barrels per day (bpd) of unrefined distillation capacity offline this September, according to Hillary Stevenson, senior director at consultancy IIR Energy.

Offered the still weak Asian gasoil principles, it would not be unreasonable to believe that traders would continue to send out freights westwards, although whether this would be onboard VLCCs would be highly dependent on freight rates, stated LSEG Oil Research experts.

In September, 3 more VLCCs - Plata Lucky, Nissos Rhenia and Antonis I.Angelicous - are slated to get diesel from the Middle East or Southeast Asia to head west, 3 trade sources and shiptracking information revealed.

(source: Reuters)