OIL AND CHEMICALS, TANKERS
The world needs to increase its oil supply, fast, and it is only good news for the tanker market.
Published 16. Feb 2022 11:00 AM
OECD industry oil stocks declined by a steep 60 mb in December. At 2 680 mb, oil inventories were 355 mb lower than a year ago and at their lowest in seven years
Let’s start this article with a quote from the IEA February oil market report “OECD industry oil stocks declined by a steep 60 mb in December, led by large draws in middle distillates across all regions. At 2 680 mb, oil inventories were 355 mb lower than a year ago and at their lowest in seven years”. When talking about the tanker market, oil inventories are extremely important as it is an indicator of when countries will start to increase their oil imports, leading to an increase in ton-mile effectively.
To say it mildly, we could be heading towards a spike in oil prices as OECD countries fight each other to fill up their inventories, but there are solutions available. If OPEC+ started to perform more effectively and remove many of the cuts that were set due to the pandemic, then oil supply could increase as much as 4.3 mb/d in 2022 plus another 2 mb/d which none-OPEC+ producers will supply. Another effective solution, which is more likely to be a plan B for politicians, is Iran sanctions. If Iran sanctions were lifted, we can expect to see another 1.3 mb/d (about one Suezmax per day) added to the market, as almost pure seaborne exports.
One thing is clear, oil prices are already high, and it has become a political topic to ensure that they do not go higher. Demand is currently exceeding supply, OPEC+ continues to underperform and miss their output targets and the global refining industry has underperformed relative to demand for the past six quarters and this is set to continue for most of 2022 according to IEA. While these are the facts we can expect producers to look for ways to increase supply any way they can. As shale becomes more profitable at these price levels, US production is also expected to grow, IEA forecast the US oil supply growth for 2022 to be 1.2 mb/d. Supply and demand will eventually find common ground and right now supply is chasing demand. With this in mind, the overall result for the tanker market is positive, and with its current pace, we believe that the effects will show in 2022.
The data and information provided by OCEAN EXL FZCO through the Intelligence platform are solely provided in good faith to clients and other relevant parties who may benefit from it. All data market through the intelligence platform is owned and maintained by OCEAN EXL FZCO with exception of data directly sourced from Freightos Baltic Index (https://fbx.freightos.com/) The data and information provided by OCEAN EXL FZCO are collected via industry experts such as shipbrokers, authorities, agents other organizations who are involved in shipping, energy, and finance. The intelligence platform is largely dependent on these industry experts’ observations and opinions and therefore the data and information are believed to be correct but are not guaranteed to be exact. All data displayed through the intelligence platform is directly owned by OCEAN EXL FZCO* with exceptions to Freight Rates for the container segment which is owned by Baltic Freight Index. All use of data within the intelligence platform without any valid license or agreement with OCEAN EXL FZCO is considered to breach our Data Policy and will not be tolerated. To license our data or to use our data for research and analysis purposes, please get in touch to hear more. This website is provided for information purposes only. Any analysis of or reference to various data, information, and analysis are opinions only.
No information on this website constitutes financial advice or other advice or any recommendation to take actions hereupon. No representation, warranty, or undertaking, express or implied, is given as to the accuracy or completeness of the information or opinions contained in this website by OCEAN EXL FZCO or any of its members or employees, and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
The OceanEXL Intelligence platform including services and data products is owned and distributed by OCEAN EXL FZCO. OceanEXL Intelligence displays data and insight which have been acquired by third-party providers and market participants and to the best of our knowledge we believe the information and data are correct but not guaranteed to be accurate and herein came from reliable sources. No information or opinion herein constitutes a solicitation of purchase, sale, or chartering of any assets including vessels, commodities, and or financial securities.
To get support please contact us at firstname.lastname@example.org or at +971 50 902 2068 / +971 50 902 2038