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Tuesday, September 25, 2018

Middle East oil shipments up

It is not easy to explain why the Very Large Crude Carriers (VLCCs) are doing so well at the moment. One explanation is that there is some waiting time in the U.S. to discharge VLCCs which is tying up tonnage. 

Increased demand for oil does not seem to be the driving force. One indication of low demand is the strongly falling rates for product and aframax tankers, despite imports of gasoline to the U.S. having reached an all-time high during the last weeks of November and also U.S. imports of distillates having increased strongly.  

Accurate, up-to-date figures have always been lacking when trying to explain the status quo in the tanker market. Spot fixtures do not tell the whole story and up-to-date oil demand figures are not available. 

The OPEC monthly report provides figures for both spot chartering in the market as well as for the amount of oil lifted on a monthly basis. These figures show that just over 40% of the shipments from the Middle East are reported in the spot market.



The above graphs show the considerable volatility in the sailings from the Middle East and in particular in the spot chartering activity. There has been a steady growth in tanker sailings over the last years and the increase until September this year is some 7%. However, so far this year spot chartering has been declining. The figures are, of course, not directly comparable because of the delay between when a ship is fixed and when it sails. However, they may indicate increased shipments of charterer-controlled tonnage. 

One aspect for consideration may be where the oil carried by the large VELA fleet is being delivered. The OPEC figures show that the largest increase in arrivals of tonnage has been to North West Europe, which so far has received 7.9 million barrels daily (mbd), or an increase of some 9%, and Southern Europe 4.4 mbd or an increase of 4%, whereas the increases to the U.S. (10.5 mbd) and Japan (4.4 mbd) have been moderate (the figures in the parenthesis show the amount of oil received in the period January to September 2005). 

In conclusion, the figures from OPEC show that the activity in the tanker market is stronger than the short-term market would seem to indicate and there are few signs that the consumption of oil has increased to any great extent. 

Contact: Erik Ranheim