LONDON (Bloomberg) — Contracts traders are buying and selling to bet on the cost of shipping Middle East crude oil this month declined 11 percent in London trading on July 29, implying the cost of hiring supertankers will drop by about a quarter in August.

Forward freight agreements, or FFAs, based on the average oil-shipping price in August fell to a mid-point of 138.5 Worldscale points from a closing price of 156 points on July 29, according to SSY Futures Ltd. Ben Goggin, a broker of the contracts at the unit of the world's second-largest shipbroker.

This means traders are betting the so-called spot price for hauling cargoes will drop by 24 percent next month. The derivatives are bets on the daily price assessments of the Baltic Exchange for the cost of hiring ships to sail to Japan from Saudi Arabia.

The exchange said on July 29 that price fell 11 percent to 182.66 Worldscale, the largest one-day drop since April 4.

Some traders who had bet on a rising market may now be mitigating their losses by selling the contracts, exacerbating the declines, Goggin said.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific voyages. They are used to negotiate individual charter contracts. The Baltic Exchange estimated that the benchmark route to Japan is paying shipowners the equivalent of $120,160 a day.