With floating storage having peaked and more tonnage being gradually released, supply is on the rise in the tanker market. With predictions for oil demand growth also ominous, the tanker market could be heading for a tough second half of the year. In its latest weekly report, shipbroker Gibson said that “as we near the halfway point of 2020, it seems like an impossible task to summarize everything that has transpired over the past 6 months. Even events which were considered major at the time now seem like a distant memory. 2020 kicked off with high tensions between the US and Iran following the killing of General Soleimani. The world wondered how Iran might react, with attacks on shipping thought likely. Then, just weeks later,the US and China signed a Phase 1 trade agreement which was expected to lead to increased Chinese buying of US commodities. Seemingly connected to this deal, sanctions against COSCO Dalian were lifted, which increased tanker supply and pushed rates to lower levels, albeit briefly. Around the same time, increased conflict in Libya saw crude exports plummet, from which they have yet to recover. Whilst the World was already aware of Covid-19, in January (when these events occurred) it was largely seen as a Chinese problem. Most of the World carried on as normal”.
++According to Gibson, “however, the rapid spread of the infection across the World soon became the dominant force in the oil and shipping markets. Just as the spread of Covid-19 was starting to have a major impact on global oil demand, a fallout within OPEC+ led to a rapid increase in crude production from March until a new OPEC+ deal was signed in April. Rapid increases in crude exports from the Middle East pushed VLCC earnings to a 15 year high (on a monthly average basis)”.