For owners struggling with fleet oversupply in Q3 of 2017, Maritime Strategies International offers hope. It predicts the market stabilizing towards the end of the year and into 2018 due to shifting trade patterns.
The MSI stated, “There would be winners and losers within the different tanker segments, and were the flow of 750,000 bpd between Venezuela and the US to dry up, Aframaxes would suffer and likely cede trade to larger vessels as the bulk of these volumes would be diverted to Asian buyers. Equally, the US would have to source replacement grades from further afield, giving an additional leg of support to tonne-mile demand.”
July brought with it record highs with all-OPEC crude exports. However, the attempt of the syndicate to lower production is questionable. While the imports into China ended in a seven-month low, the inflow from OPEC’s producers in the Gulf reduced.
“Though the remainder of Q3 will be weak, fleet growth has now moved past its peak which should have some stabilising effect as we look to 2018. Despite falling in June, T/C rates are set to see a modest improvement over our forecast. However, liquidity is thin and should the upside expected in Q4’s spot market not materialise, the period market could move lower as owners look to protect against spot market downside,” the MSI further added.
MSI Analyst Sierra Highcloud deducted that to fill the gap made by Saudi Arabia (that pledged to cut crude allocations to Asia by 10%), Asian importers may buy longer haul crude from the Atlantic Basin.
Also, with regards to Venezuela, where output has already seen a dramatic decline due to political turmoil, any possible oil-related sanctions would invariably have numerous and far-reaching impacts across the tanker market, adds Highcloud.
While there has been a reduction in Middle Eastern medium/heavy crude, African OPEC volumes of lighter grades have tracked higher. Also, recent upgrades (that allow refiners to easily switch between running light and heavy crude), have enabled India to buy more US crude.