TANKERS

100 dollar oil prices and a better tanker market

Published 26. Jan 2022 10:42 AM

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We are at a time with increasingly high oil prices and it seems demand will continue to grow

We are at a time with increasingly high oil prices and it seems demand will continue to grow. Importing countries and primarily OECD countries will make use of their oil inventories while prices are high, and industry experts such as Goldman Sachs expects that OECD countries will see historically low oil inventories (lowest since summer 2000), which will then lead to a global buying spree, resulting in oil prices above USD 100.

There are several reasons to believe that demand will continue to grow. Air travel is one, as Omicron is starting to get accepted as a mild variant, many expect that restrictions that currently made it harder to travel will ease out.

On the supply side, it looks less promising as OPEC+ seems to not be increasing its output/supply enough to meet the growing demand. Another factor, that would, however, also be able to change the picture, is the ongoing Iran nuclear negotiations. So far there has been less progress than what was expected when Biden took office and we might not see any further improvement on this front, before well into 2023.

How will the tanker market react?

As a natural reaction to increased imports of crude and clean products, there is reason to believe that a turnaround of the market will come simultaneously.
An increased amount of tankers have been scrapped throughout 2021 and 22. According to IHS data, 459 vessels were demolished/stopped trading in 2021 while only 364 were delivered to the market. We might be able to see some of this reflect the market at the end of Q1 already, but Q2/Q3 should be the real winners.

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