Analysts at New York tanker brokers Poten & Partners are bullish for crude tanker owners on the back of the just released oil market report from the International Energy Agency (IEA), with the ton-mile scenario set to stretch further.
According to the IEA, the East of Suez crude balances (Middle East and Asia combined) show a shortfall of 6m barrels per day at the end of its forecast.
“This means that even if Middle East producers direct all their exports to Asian refiners, the latter would need to source another 6 mb/d from other regions. Diversification of crude supplies outside the Middle East is no longer a choice, but a necessity to fill the growing Asian need for crude,” the IEA report stated.
“Since crude oil production in Asia is relatively small and declining, more crude will need to come from long-haul sources in the Atlantic Basin, boosting ton- mile demand. This growing imbalance will also make triangulation more difficult, reducing the efficiency of the tanker fleet. All this should be music to the ears of the owners of larger crude oil tankers,” Poten stated in its latest weekly report.
The report referenced a famous 1970s quote from iconic Norwegian owner Erling Naess: “God must have been a shipowner; he placed natural resources far away from consuming nations and covered two- thirds of the earth with water.” At the time, Naess was primarily referring to the ever-increasing dependence of consumers in Europe and North America on crude oil from the Middle East. However, more than 50 years later, a shipowner looking at the crude oil tanker market of today may come to the same conclusion, Poten suggested.