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Industry Opinions

 

Spring Break for MRs?
March 20, 2015
Is the strength in the MR market sustainable?

Several years ago, the general thought seemed to be that product tankers were the future, while crude tankers were expected to have a hard time for the foreseeable future. The idea was that refinery expansions in India and the Middle East were going to lead to growing product tanker demand while the growing oil production in the US was going to curtail crude tanker demand. As MR rates have improved significantly in the last six months, the question arises if this is due to fundamental changes that are finally falling into place or whether it is the result of a seasonal upturn that could fizzle out over the next months.
 
Crude Awakening for Aframaxes
March 13, 2015

 Dirty Aframax tankers continue to have potential


For many years, the Aframax crude oil tanker was the workhorse of the crude oil tanker industry. This vessel size was very versatile, could enter almost any crude oil load and discharge port worldwide and was an ideal match for the rapidly growing short-haul crude trades in regional basins such as the North Sea, the Baltic Sea, the Caribbean Basin and the Mediterranean and Black Sea, as well as the regional trades in South East Asia. From 1990 to 2010, the Aframax fleet more than doubled from 407 to 837 vessels, a compound annual growth rate of 3.7%, making it the fastest growing crude tanker segment over that time period. In recent years, however, the popularity of the Aframax tanker seems to have diminished somewhat, while the growth of the Suezmax and VLCC fleet has continued. Has the age of the Aframax come to an end or does this segment have further upside?

 
Close the Window - It is Cold Outside!
March 06, 2015
Product tankers facilitate global arbitrage trades

Over the last couple of years, the U.S. has developed into one of the largest exporters of oil products. Increasing domestic crude production and access to cheap shale gas has improved the international competitiveness of U.S. refineries. At the same time, the U.S remains a significant importer of oil products. In 2014, the U.S. exported 3.12 Mb/d of refined petroleum products and they imported 1.74 Mb/d (see Fig. 1). As a result, arbitrage opportunities regularly open up in the US for refiners and traders. Recently, several unrelated issues have created arbitrage opportunities on both the East and West Coast of the United States.
 
Can Owners Avoid Growing Pains
February 27, 2015

Fleet expansion remains limited despite healthy market


Fleet growth was limited in 2014 as the large orderbook that existed at the start of the financial crisis was mostly delivered or cancelled prior to last year. Contracting was also limited as the financial turmoil and market uncertainty kept owners away from the shipyards. Growing demand with limited fleet growth resulted in a tightening supply/demand balance and improving freight rates.

 
South of the Border Swap
February 20, 2015
The Potential Impact of a US - Mexican Oil Exchange
As geographical neighbors, the United States and Mexico have a long and mutually beneficial energy relationship. For many years, Mexico has been one of the top suppliers of crude oil to the US, which has reciprocated by sending significant volumes of refined products to Mexico. Mexico is also the largest net importer of US natural gas. Both countries are now exploring ways to further increase their ties. PEMEX, Mexico’s state oil company, has applied for a swap transaction that would involve importing heavy Mexican oil into the US in exchange for equivalent volumes of light US crude oil. What is the background of this proposal and how would it impact the crude oil and petroleum shipping markets in the Caribbean and beyond if it was approved?
 
More Barrels From Babylon
February 13, 2015
Iraqi Production and Exports Near Historic Highs
In the context of oil production growth, the US is the country that is often mentioned as the fastest growing non-OPEC producer. Within the group of OPEC countries, Iraq is the star performer with rapidly growing production. The International Energy Agency (IEA) estimates that in 2014, Iraq’s oil production averaged 3.33 Million Barrel per day, the highest production since 1979, and a 7.5% increase over 2013. Iraq is now the second largest crude oil producer in OPEC. Exports increased by 3.8% in 2014 to reach 2.5 Mb/d. Considering the geopolitical turmoil in the region, this is an impressive achievement and the country has ambitious future growth targets.
 
Pipe Dreams
February 06, 2015
Will pipelines cloud the outlook for the tanker market?

A number of years ago, there was much discussion about new pipeline construction and expansion projects and their potential impact on tanker demand. Recently it has become quiet, in particular with respect to pipelines outside of North America. What is happening to some of these high profile projects?
 
What’s in Store for Tankers?
January 30, 2015
How can the oil market balance supply and demand?

2015 seems to be off to a very good start for tanker owners. Rates are strong and the outlook appears favorable, at least for the next 6 to 12 months. There is an expectation that a significant number of large crude oil tankers will be employed in floating storage as a result of a widening contango in the oil markets. As these vessels leave the spot market, spot rates will experience another boost. Going forward, some of the key questions are (1) how much excess oil is in the market, (2) where will it be stored, (3) how long can this imbalance last and (4) what happens next?
 
A Mulligan for Capesize Owners?
January 23, 2015
How bulker conversions will impact the tanker market

While the tanker market has gone from strength to strength on the back of sharply lower oil prices and moderate fleet expansion, the dry cargo market, in general, and capesize bulk carriers, in particular, are in the doldrums. The dry bulk orderbook for 2015 and 2016 delivery remains high, in particular for Capesize vessels. Is it realistic to expect that a significant portion of these large bulk carriers are going to be converted to Aframax or Suezmax tankers?
 
No Blast From The Past
January 16, 2015

The collapse in oil prices that we are experiencing now is not unprecedented.  As a matter of fact, something very similar happened in the oil markets in 1985 and 1986.  Within a period of 8 months, the Brent crude oil price went from $30 per barrel to $10 per barrel.  What was the situation in the tanker market back in the mid-1980s?  Is history repeating itself in the tanker market as well? 

 

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