Crude oil tanker market in the doldrums

MSI reports the main trades, such as exports from the Middle East are weak. In the US, an increase in domestic demand has reduced exports. China has also imposed a series of restrictions on crude oil imports.

MSI notes that crude oil tanker spot rates are far below the levels seen 12 months ago. VLCC earnings were stable but low at US$3,700/day average in May with a slight increase to US$4,000/day in the first half of June. The main driver, Chinese crude oil imports, have been hit by a series of measures aimed at producing a longer-term reduction in carbon emissions.

The main ruling impacting crude oil imports was a ban from the central government on PetroChina trading import quotas with independent refineries. MSI estimates this may reduce 2021 imports by 12-16M tonnes lower, halving year-on-year growth to 3%.

On the Suezmax tanker side, MSI reports spot rates across a basket of trades entered negative territory in May 2021. Despite this, it notes an increase in secondhand values. The delivery profile of new Suezmax tankers entering the fleet will drop away sharply in the second half of 2021, noted MSI.

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