The cost of sending crude oil cargoes from the Baltic Sea to the UK Continent has dropped to the lowest level in over seven years on a persistent oversupply of vessels.

The Baltic-UKC route, basis 100,000 mt, was assessed Worldscale 1.25 lower at w48.75 Tuesday. This equates to $4.06/mt, the lowest since a $4.06/mt assessment on May 13, 2009.

While a steady supply of crude oil stems continued to be covered from Primorsk and Ust-Luga, there was little complementary North Sea crude and Baltic fuel oil business for shipowners to bid on. According to market participants, a lot of fuel has been moved out of the region on Suezmaxes, while a lot of North Sea crude is due to load on VLCCs in the coming weeks.

Both factors have limited demand for Aframaxes in the region and caused a build-up of prompt tonnage.

At the current freight rates, time charter equivalent returns on the Baltic-UKC route are running at below $5,000 and when other costs are considered owners returns are in negative territory.

As a result of this, there was some disagreement as to whether further freight rate decreases were possible. “W47.5 was done on a special deal [for Baltic-UKC] but when you start to bring in short options the market cannot be less than w50 as it is an immediate negative earning for the owners,” said a shipowner.

Others said certain owners would do lower rates in order to get their ships moving. “It’s very quiet today. We seemed to have a conference rate at w50 but some owners are visibly desperate and as the tonnage builds up we might see a lower rate done,” said a shipbroker.