Supertanker Earnings Go from Boom to Bust as Demand Wavers
Just six months ago, oil supertankers
experienced a windfall as the pandemic slashed demand for crude and traders
raced to book vessels to store the resulting glut. Now that season of good
fortune for those ships has all but vanished.
The tankers, which
can haul 2 million barrels of oil across the world’s oceans, are now earning
just $6,103 a day on the benchmark route from the Middle East to China, Baltic
Exchange data show. That’s the lowest since May 2018. Back in March, they could
make $250,000 a day on the same journey.
The boom-to-bust comes as the recovery in oil demand stutters
comes as the recovery in oil demand stutters and the OPEC+ alliance continues
to curb output, reducing the need for tankers. At the same time, China, the world’s
largest crude importer, has slowed its purchases following a buying binge when
oil was cheap.
“The demand that
was pushed forward is now not showing up anywhere in the market,” said Peter
Sand, chief shipping analyst at industry group BIMCO. “There’s still a little
bit of floating storage around, and that storage is easing mostly,” weighing on
rates, he said.
To help improve rates in the short-term, vessels can slow down in
order to limit availability
To help improve
rates in the short-term, vessels can slow down in order to limit availability.
Renewed interest from traders to store oil at sea on a temporary basis could
also provide a boost. Shipowners usually prefer the former when rates are low
so that they can capitalize on any future improvement in earnings.
Outlook doesn’t look much better
For now though,
the outlook doesn’t look much better. More ships are starting to come available
as congestion begins to ease at China’s ports following the buying spree
earlier in the year, Clarksons Platou analysts including Frode Moerkedal wrote
in a report this week.
“The return of
vessels from floating storage and reduced port congestion is putting pressure
on rates,” the analysts said. “We expect an improvement of crude oil trade will
have to wait until oil stock levels have come down before OPEC+ opens its tap.”