Fairplay: Tankers Feel Volcano Fallout

“Iceland’s volcanic eruption has caused fallout for Europe’s product tanker trade, according to Poten & Partners. The flight ban slashed demand in Europe’s 1.2M bpd jet fuel market. Given limited airport storage, some delivery pipelines stopped accepting cargoes. ‘Vessels carrying jet fuel, which were unable to discharge in Northwest Europe, were forced to remain at port on demurrage,’ reported Poten. Refiners supplying jet fuel to Europe face two options, Poten explained: ‘Blend excess fuel into middle distillates or change configurations to reduce jet fuel production. ‘ ‘If refiners choose to blend into distillates, they will likely introduce cargoes into an already-oversupplied market, potentially putting downward pressure on clean freight rates in the region,’ Poten warned. But there’s also a contrasting impact. ‘Unwinding the logjam surrounding delivery of jet fuel to airports is likely to keep ships out of the market and could lend some support to clean carrier freight rates,’ it explained. An increase in products floating storage could also be seen, ‘though which cargoes are likely to be stored depends on what regional refiners choose to do with their jet fuel’, Poten said.”