Oil trade shift sparks demand for future-ready tankers

In her address at the Tanker Shipping & Trade Conference taking place in London on 14 October 2024, Hanwha Ocean Europe CEO Claire Wright discussed the evolving trends in crude oil trades, particularly focusing on Asia, and the implications for future VLCC demand.

Ms Wright noted the plateauing of China’s crude oil demand and projected India as the next major driver of growth.

According to the IEA, India is expected to outpace China in demand growth by 2030, though China’s consumption will still dominate the market.

"The demand for crude oil in China is anticipated to plateau toward the end of this decade at 18 million barrels per day," Ms Wright noted.

She further highlighted the growing demand for road fuels in India, contrasting it with China’s increased electrification, where 60% of global electric vehicle sales occur.

Ms Wright delved into the future of the VLCC fleet, pointing out that the ageing fleet and the rise of the parallel fleet (involving vessels that operate under sanctions) are crucial concerns.

"The average age of VLCCs has risen to 12 years, and with limited scrapping, fleet renewal will soon be inevitable," she remarked.

The shadow fleet, consisting of ships trading under sanctions, now includes more than 120 VLCCs, further tightening supply.

Ms Wright underscored that, as IMO regulations tighten, the cost of compliance will drive further investment in energy-efficient technologies.

"Owners must think about future fuel pricing and carbon costs, making retrofitting essential to remain competitive," she said.

Ms Wright’s outlook on the sector reflected optimism for tanker demand stability through 2050, despite the broader energy transition, but stressed that fleet renewal will be driven not just by demand but also by the need for technological adaptability.

Addressing Hanwha’s focus on future technologies, Ms Wright stressed the importance of energy efficiency and retrofitting capabilities and mentioned Hanwha’s strategy of offering designs that can be retrofitted with future fuels like hydrogen or ammonia.