Oil traders told to wind down deals with Cosco by Dec. 20
Oct. 24, 2019 2:46 PM ETFrontline Ltd. (FRO)By: Carl Surran, SA News Editor4 Comments
The U.S. Treasury Department issues a sanctions waiver until Dec. 20 to China's Cosco Shipping Tanker to wind down all transactions related to Iranian oil under U.S. sanctions.
The Trump administration imposed sanctions in late September on Cosco affiliates for allegedly transporting oil from Iran, a move that caused huge increases in shipping costs for oil and liquefied natural gas as traders that had booked Cosco tankers immediately dropped their charters and rushed to find alternate tonnage.
Freight rates for Very Large Crude Carriers have dropped sharply since the initial post-sanctions spike, as charterers booked different ships and the market digested which Costco vessels were off limits.
The cost of booking a VLCC sailing out of the U.S. Gulf Coast has plunged 45% since Oct. 14, when freight reached a peak of $21M for ships discharging in China, according to S&P Global Platts.
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