Crude oils are not all alike. They differ considerably in their physical properties of particularly their viscosity, sulfur content, metals content and the proportions of the various hydrocarbon fractions that can be turned into the different end products. These properties affect the ease with which the refineries can process various crude oils into the different products required by the consumers.
The refineries are interested in a crude oil for the value of the products it yields. The aim is to turn the crude oil into as much of the lighter, higher priced products and as little of the heavier, lower priced products as is cost-effectively possible. Thus the crude oils that are naturally ‘light’ have a higher price than the crude oils which are naturally ‘heavy’.
The different crude oils are graded by their density or specific gravity and assigned an API gravity. The higher the API gravity the lighter the compound.
The U.S. Department of Energy labels the crude and petroleum products with a API gravity of 20 degrees or less as ‘heavy’, and petroleum products with a API gravity of 40.1 degrees or greater as ‘light’. The crude and petroleum products in between 20 and 40.1 degrees are labeled as ‘intermediate’.
The EU and IMO have a slightly different definition of ‘heavy’. Their cutoff between ‘heavy’ and ‘intermediate’ lies at 25.7 API gravity, meaning that more crude oil types fall under the ‘heavy’ definition of EU and IMO.
The IMO definition is particularly noteworthy since this is the definition that defines the products which the non-double-hull tankers are not allowed to transport as of April 2005.
The EU has already adopted stricter regulations on the carriage of heavy oils in non-double-hull tankers in EU waters.
The different crude oils are also graded by their content of sulfur. A low sulfur crude oil is ‘sweet’, and a high sulfur crude oil is ‘sour’. Sulfur is a pollutant and its level in finished products is increasingly being limited in both the U.S. and the EU.
Together the two main characteristics, the API gravity and the sulfur content, are significant factors in explaining the price level and trade pattern of a particular crude oil.
The crude oil tankers are distinguished according to their size.
The size of tankers is usually measured in dwt.
The four most common crude segments are the VLCC/ULCC, Suezmax, Aframax and Panamax.LCC
The Very Large Crude Carrier (VLCC) is only superseded in size by the Ultra Large Crude Carrier (ULCC). The number of ULCC tankers is very limited (11 ships) and has been declining.
The VLCC/ULCCs are predominantly employed on the long voyages between the Middle Eastern countries and the USA or the Asian countries. The VLCC/ULCCs are to a large degree limited from being employed on the short intra-regional voyages because the sheer size of the tanker usually prevents it from entering the small harbors with depth and length restrictions. On short haul voyages where the demand at the destination is rather limited it is much more efficient to ship small cargo sizes thus avoiding long periods of time along the quay and avoiding investing in large storage facilities at the destination.