There's seems to be no stopping a surge in oil tanker rates which has given owners of the vessels such as Frontline (FRO +2.6%) and Euronav (EURN +1%) one of their biggest boosts in years.
Daily rates for very large crude carriers to ship oil to China from the Persian Gulf soared 90% to more than $300K/day at the end of last week from $25K/day just a month ago, Bloomberg reports, citing data from the Baltic Exchange in London.
Rates have rallied so high that a secondhand supertanker could theoretically pay for itself in a couple of voyages, rather than the normal payback period of roughly a decade, according to estimates from Clarkson Platou Securities.
"At current rates, owners could pay back a 10-year-old VLCC, valued at $47M including scrap value of $16M, after only two trips," Clarksons Platou analysts say. "Even at half the current VLCC rate, most owners have an earnings yield of above 75% and could thus earn back their entire market cap within a year."