The UK’s vote to exit the European Union after being a member since 1973, could have a positive impact on the tanker market in terms of movement of oil products between the UK and EU countries, according to Poten & Partners.
Namely, given the short-haul nature of the UK – EU crude oil and product trades, any changes in trade-flows as a result of Brexit could be positive for ton-mile demand, in particular for product carriers.
The figures for exports over the last 10 years from the UK to countries in the European Union show that the exports are slowly trending down, primarily as a result of the decline in crude oil production and exports.
In the first quarter of 2005, UK exported 7.8 million tons of crude oil to other EU countries, representing 69% of total exports by volume. By the first quarter of 2016, crude oil exports were down to 5.1 million tons.
Poten & Partners said that the exit vote came as a shock and, as a result, currency, commodity and stock markets are in turmoil across the globe.
The short-term economic and political impact as a result of the heightened uncertainty and the long-term implications will only become clear when new trade agreements are being negotiated, which could take several years, according to Poten & Partners.
In April, the IMF ranked the United Kingdom as the 5th largest economy in the world after the USA, China, Japan and Germany and, as an island and former global empire, shipping has traditionally been an important part of its economy.
Although the country’s influence has been waning over the years, the United Kingdom remains an important player in the international shipping markets, ranging from insurance to banking and shipbroking, however, there is a possibility that an exit from the EU would accelerate the decline of the British influence in these markets.
As a result of Brexit more leading international banks and financial institutions may decide to move out of the UK or establish their European headquarters in another location within the EU.
This could also have a detrimental effect on all the related maritime services in the UK, however, from a global maritime perspective, a shift of these services out of the UK to other countries will not be a material event.