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Thursday, November 15, 2018

INTERTANKO talks in Middle East on tanker supply and demand

INTERTANKO showed the background to the current tanker supply/demand situation at the Maritime Outlook Middle East conference in Abu Dhabi. The Association’s Research Manager, Erik Ranheim, suggested that demand development will naturally largely depend on the length and depth of the economic crisis which at the moment appears to be deepening, while supply is at the moment tightened as VLCCs are used for floating storage - although these tankers are assumed to return to trading later this year.


Structural changes in trade may be contributing to increased tonne miles, as both North Sea and Russian oil production is declining and therefore Europe may need more long-haul crude oil. On the other hand, the U.S. is increasing domestic oil production in the short term at the same time as its oil demand is declining – negative for tonne-miles. However, declining Mexican oil production could mean that the U.S. might take more long-haul crude when oil demand recovers.


China is about the only place where oil demand is increasing, but then Chinese domestic oil production is set to increase (marginally) this year.


Some wildcards exist - the Russian oil pipeline that is being built to supply the eastern markets, which in a couple of years could reduce tanker demand.


The projected new Middle Eastern export refineries may also to some extent mean a shift in demand from crude oil tankers to product tankers. The same is the case with the new refinery in India’s Jamnagar which is soon scheduled to reach full capacity.


U.S. energy policy, that includes reducing the country’s dependence on imported oil, is also something to watch.


With a large newbuilding order book, the tanker market needs increased demand even if all single hull (SH) tankers were to be removed by 2010. However, we have already seen some delayed deliveries, and some cancellations may also alleviate the tanker supply situation. In fact, it is questionable whether all SH tankers will be removed by 2010. Most probably some will continue in special sectors. Even if there were to be a demand increase of up to 4% over the next three years, new tankers are not needed.


Ranheim also gave a presentation called “Are Tankers Green” focusing on how the environmental performance of tankers has improved tremendously - in particular accidental pollution. He also analysed the most important oil tanker accidents since the beginning of the 1990s and questioned whether history would repeat itself. His conclusion was that measures have been implemented to considerably reduce the risk of similar accidents happening in the future.


He then went through the most important aspects of the IMO’s MARPOL Annex VI legislation, and also the proposed measures to reduce greenhouse gases (GHGs).

To see this presentation click here


Contact: Erik Ranheim