Since the financial crisis in the second half of 2008, the Worldscale flat rates set each year by a specialist panel of brokers have fluctuated wildly, driven by the extreme volatility in oil prices, resulting in bunker price changes.
However, from the end of 2008, bunker prices have generally been on the rise until the second half of 2012 when they stagnated but at a relatively high level.
Prices over the last six months of this year have remained unusually stable and as a result, we have seen a reduction in the overall average bunker price this year, Gibson Research said in its weekly report.
Last year, bunker prices soared to three times the level seen in late 2008/early 2009 and this was the principal reason why the tanker industry has witnessed an increase in Worldscale flat rates since this period.
This year, we have seen periods of elevated prices (up to $681 per tonne for representative average high sulphur fuel oil), primarily on the back of political and supply concerns in the Middle East and North Africa, Gibson said.
However, prices did not hit the all-time highs seen in the first quarter of 2012 when representative average prices reached $746 per tonnne.
The bunker element that goes into the flat rate formula is based on prices between October and September each year, therefore we already have the data that will go to make up the 2014 calculations.
Cumulatively, over this period, bunker prices have averaged 8% less than the corresponding period last year.
This suggests that Worldscale flat rates will decrease by about 5-6% on long haul voyages and by 1-3% on short haul routes, Gibson forecast.