Gulf to Japan VLCC freight hits four-year low partly due to Opec cuts

London: The world's main crude export route sank to a four-year low last Tuesday, hit by strong fleet supply, long-standing Opec cuts and refinery maintenance in Asia, according to brokers and analysts.

The Very Large Crude Carrier (VLCC) route from the Gulf to Japan struck W50 - its lowest level since October 2003, according to Reuters data.

The London Baltic Exchange confirmed the physical spot trade on the route at W49.97 - an average between single and double-hulled oil tankers on the long-haul voyage.

Japan is Asia's biggest importer of crude oil, closely followed by China. More than two-thirds of the Gulf's oil flows to Asia.

Brokers Simpson, Spence & Young cited a bout of refinery maintenance in Japan at the end of August and South Korea as a further reasons for the weakness.

Other core rates from the Gulf to the United States and out of the Atlantic Basin - West Africa and the North Sea - to the United States have already struck four-year lows.

Long-haul routes

Despite strong world crude demand and buoyant economic growth, major long-haul crude export routes - including those from top producers in the Gulf - have been hit hard by strong fleet growth and long-standing Opec cuts this year.

The Organisation of Petroleum Exporting Countries decided last year to lower output by 1.7 million barrels per day (bpd), equivalent to a VLCC's worth a day from the market.

The group is meeting about 900,000 bpd of the promised reduction, according to a Reuters survey of July output.

High stocks in the United States and a backward dated Nymex crude futures market since mid-July have pressured export flows and correspondingly rates, as traders delay buying.

A heavy round of refinery maintenance in the world's biggest consumer and unscheduled stoppages have also squeezed flows.