Tanker Shipping Industry Benefits from Sharp Rise in US Crude Oil Exports

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While the United States (US) government lifted their restrictive policy on crude oil exports in December 2015, in September and October 2017, increased demand from Asia and Europe has caused US seaborne export of crude oil to surpass the US seaborne export of oil products in terms of billion tonne miles.

This is due to US crude oil being exported twice the sailing distance of US oil products. In October, the seaborne exports of crude oil amounted to 46 billion tonne miles whereas the US export of oil products was equivalent to 43 billion tonne miles.

Despite the US seaborne exports of crude oil, being half the amount of seaborne oil product exports in October 2017 (in terms of volume), it is now more important to the tanker shipping industry. This is due to the average sailing distance per exported tonne of crude oil being more than double the distance than the exported oil products.

Asia and Europe demand US crude oil

For the first 10 months of 2017, the US seaborne export of crude oil has increased 151 per cent compared to same period last year. This amounts to an additional 20 million tonnes of crude oil being available to the shipping market, equivalent to 7.5 VLCC cargoes being exported more per month compared to 2016.

While the average distance per exported tonne of US crude oil for the first 10 months of 2016 was 4,277 nautical miles, it has been 7,090 nautical miles for the same period in 2017. In October alone, Europe has already taken an amount of crude oil similar to the amount imported in each of the previous quarters of 2017. Thereby, the average sailing distance has dropped a bit from Q3 2017, but still remained above 7,000 nautical miles.

“The increased US crude oil exports during 2017 benefits the crude oil tanker shipping industry. The demand on that trade is up by 151% compared to last year. Not only are the volumes more than doubling, the sailing distances are increasing as well,” Peter Sand, BIMCO’s Chief Shipping Analyst, said.

“US crude oil exports are now more important to shipping than US oil product exports. Asia and Europe are the importers demanding most US crude oil in 2017. With Asia in particular being responsible for the longer sailing distances,” Sand added.

China, being the main importer of US crude in 2017 is not only due to rising Chinese crude oil demand. China imported 55 per cent from the Middle East in 2015, whilst importing 45 per cent from the Middle East during the first 10 months of 2017.

“China is diversifying their crude oil supplier portfolio by shifting away from being too dependent on Middle Eastern crude oil,” Sand said, adding that the sailing distance to China is double the distance of Middle Eastern export to China and thereby tonnage is tied up for longer periods, benefitting crude oil tanker demand.

Sea News, December 13