The hope is that widespread vaccination against Covid-19 will increase oil demand, but post-Covid-19 trade flows might benefit product tankers the most.
One major determinant of tanker demand in 2021 will be the widespread availability of a Covid-19 vaccine. That will clearly impact how soon the pandemic diminishes and how soon life, and tanker demand, returns to normal.
BIMCO’s chief shipping analyst Peter Sand warned: “The expected uneven recovery in oil consumption and economic activity will change the trade patterns of the global oil tanker industry. It will not be a swift return to business-as-usual, and chartering activity will look quite different to that of pre-pandemic 2019.”
He continued: “Making the recovery potentially tougher for tankers is the massive inventory builds during the first half of 2020. It is not hitting the industry like a boomerang, but an inventory built represents future oil demand already in the right place for future consumption. Thus, fewer cargoes will be transported than would otherwise be needed if stocks were not bloated.”
Poten & Partners’ head of tanker research & consulting Erik Broekhuizen said that in the longer term this could mean that refining capacity will be concentrated worldwide in regional hubs, such as Singapore, Korea, China, India and the Middle East, in addition to the traditional western refining centres in Europe and the US Gulf.
This will change the product tanker trade. “Refined products will move in larger quantities over longer distances,” he noted.
This is already occurring to some degree, with newbuilding Suezmaxes and VLCCs moving product from Asia into the Atlantic Basin.
Mr Broekhuizen suggested that this might develop into a ‘hub and spoke’ model, where larger coated tankers deliver into distribution hubs and smaller tankers will distribute the products to end users. “All in all, this is a possible scenario that bodes well for the product tanker market,” he said.
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