Brent crude slumped to its lowest level since August, 2010 on Thursday, after OPEC agreed not to cut output at its Vienna meeting.
OPEC's secretary general Abdallah Salem el-Badri said that the members would not try to shore up prices by reducing production.
"There's a price decline. That does not mean that we should really rush and do something," he said.
Following the announcement, Brent fell below $72 per barrel, before settling at $72.82 on Thursday afternoon, a 5% drop on the day. By this morning (Friday), it was trading at a fraction over $72 per barrel.
At the meeting, the 12 OPEC members decided to maintain production at 30 mill barrels per day, as first agreed in December 2011, until the next meeting scheduled for June next year.
The fall in the oil price has been causing concern for several members of the oil cartel, as most require a price above $80 per barrel to balance their government budgets and many need prices to be above $100 per barrel, according to a report from Platts.
This move should bolster a firming tanker market and comes as VLCC Worldscale rates for trips East of Suez reached their highest level for nine months on Thursday.
According to Platts, the peak was down to strong demand to ship crude in the winter season, tight supply, as charterers combine smaller cargoes and bullish owner sentiment.
The key PG/Japan route was assessed on day Wednesday at WS61, up by three points.
Higher freight rates and decline in bunker fuel prices have given a significant boost to owners’ earnings, Platts said.
Daily VLCC TCEs on the Persian Gulf to East route are now more than $52,000, up from around $5,800 at end-September, basis 270,000 tonne cargoes, according to brokers’ estimates.
So far, more than 56 VLCC fixtures for Persian Gulf and Red Sea loadings were thought to be have been fixed for December liftings, indicating higher demand compared with the previous month, according to industry estimates, Platts said.
Also good news for owners, but not for shipbuilders, was that newbuilding contracts remained few and far between.
The only deals reported this week concerned CSSC (Hong Kong) Shipping, the financial leasing subsidiary of state-run shipbuilding group CSSC, which signed contracts with Shanghai Waigaoqiao Shipbuilding (SWS) for the construction of five 158,000 dwt Suezmaxes.
The total value of contracts was thought to be about $320 mill ($63.5 mill per vessel). The vessels will be chartered to an Indian company upon delivery at the end of 2016 and 2017, broking sources said.
Another newbuilding contract involved Unique Shipping who reportedly ordered a 84,000 cu m VLGC for $79 mill from Hyundai Heavy Industries. She will be delivered in 2016, brokers said.
Newbuilding resales were still ticking over with interests connected to Maersk reportedly purchasing four MRs building at Sungdong for $34.5 mill each this week. They are due for delivery in 2015.
Perhaps a sign that charterers believe that rates are going to continue to firm comes with news that Petrobras was thought to have fixed a VLCC and two Aframaxes for three year charters.
The VLCC- the 2002-built ‘Amantea’ - was said to have been fixed for $30,000 per day, while the Aframax sisters ‘Barents Sea’ and ‘Aral Sea’ were thought concluded at $20,000 per day to the Brazilian oil major.
Another Aframax - the 2007-built ‘NS Creation’ - was said to have been taken by Statoil for 12 months at $18,000 per day, while Mansel was believed to have fixed the 2011-built Suezmax ‘Suez George’ for 12 months at $23,000 per day.
In the S&P sector, the elderly 1991-built Suezmax ‘Olympic Faith’ was reported sold to unknown interests on private terms, while the 2003-built MR ‘High Nefeli’ was believed sold to Ancora Investments for $15 mill. A previously reported sale was thought to have fallen through.
Meanwhile, Indian interests were said to have snapped up the 1999-built Handysize ‘Chemtrans Rhine’ for $7.4 mill.
Leaving the fleet was the 1991-built Handysize ‘Dugbaki’ reportedly sold to Pakistan breakers on private terms.
Venezuelan state owned tanker owner PDVSA has shed six 1980s-built vessels. The 88,500 dwt sisters ‘Leander’ and Morichal’, two 56,000 dwt sisters ‘Paria’ and Moruy’, plus two LPG carriers, were said to have been sold for $136 per ldt each at an auction to unknown breakers.