Hold the line,” platoon commander MBS shouts as Saudi Arabia leads the OPEC+ alliance further into the battlefield. Clearly, some privates of the OPEC+ army are finding it increasingly difficult to do so. As Splash Extra predicted, cracks are showing fast now that oil prices are up again – as they are all scrambling to raise revenues from selling the only valuable commodity they can.
These cracks will prove to be a pleasant surprise to tanker owners. Higher oil production will lead to higher exports, more fixtures, and lower oil prices. Everyone wants to buy the black gold when it is cheap and Iraq, Nigeria, and Kazakhstan are finding compliance difficult.
And if buyers do not care about freight rates and sailing distance, it will become another crazy off-fundamentals ride. Buyers of crude oil didn’t care back in April and May when the US paid the price for making MBS stop his army from marching on.
Will any of the listed companies save money for a rainy day or pay it all out in dividends?
Six weeks of 1.5+m barrels per day (a total of 32 VLCC loads) of Saudi crude oil went into Texas senator Ted Turn-those-tankers-the-hell-around Cruz’s own backyard. Amazing. Splash Extra is over the moon when something like that happens.
But it gets better than that, as the US in May sent 5m tonnes of shale oil (a total of 17 VLCC loads) to Shandong province in China. And just when you think that it cannot get much more inefficient than that, it does. For reasons unknown to Splash Extra, the Chinese merchants decided not to take immediate delivery of the purchased barrels. Could it be that they are merely teasing traders? Hopefully! Suggesting a lack of storage facilities is outright naive.
Splash Extra notes that dividends come in large amounts this year. It’s ironic when all of New York’s investment bank scavengers have just abandoned the industry after deceiving shareholders while helping shrewd owner-managers for two decades in a row.
Oaktree Capital Management (OCM) for one is handsomely rewarded for its involvement in bringing product tanker company Torm back from the brink of bankruptcy, a position the company reached after paying out massive dividends to its then reeling Greek owner-manager, Gabriel ‘Villy’ Panayotides of Excel Maritime.
It’s important to note freight rates are only covering a bit more than opex in the current market regardless of ship size and oil trade in the spot market. Handysize oil product tankers are the exception as they have only made $3,543 per day since early June, covering just half of their opex.
Will any of the listed companies save money for a rainy day or pay it all out in dividends? They need to put a huge sum of money into their chests if they are going to lose money every day for the coming 450 days.