Ever since OPEC countries decide to cut down on oil production, tanker market rates have been on a decline. A maritime crisis, though presumed to be of short duration, has come to the unexpected rescue of tanker owners. How? Let’s see.
Most shipping companies have been on a loss-making spree ever since OPEC decided to go with the aforementioned decision. Exports of petroleum got halted, and the number of available ships increased. However, the recent Suez Canal blockade is raising vessel rates across different routes. It includes the vital Middle East-to-China route, that has remained unaffected by the blockage.
So much so that supertankers brought in a profit for the first time since Feb 2, when the earnings for supertankers were at $626 a day as per data from the Baltic Exchange.
Rahul Kapoor, global head of maritime analytics and research at IHS Markit told Bloomberg, “The blockage will only be a short-term positive. The key for any meaningful recovery in the tanker market hinges on increasing OPEC oil production and global exports. No signs of that are imminent.”
For tanker rates, the best-case scenario would arise if ships would divert away from the canal and travel around the Cape of Good Hope instead. This would add around 15 days to the voyage length from the Middle East to Europe, with available ships getting the chance to bid on cargoes.
This would be a welcome move for spot rates as a stuck Ever Given means more tanker reroutes.
A prolonged shutdown in the Suez Canal would mean that Very Large Crude Carriers(VLCCs) would get preference over the smaller Suezmax and Aframax, as per Braemar ACM Shipbroking Pte.