The recent drop in the oil price is positive for world tanker business, Herbjørn Hansson, Chairman & CEO of Nordic American Tankers Limited (NAT) said in a letter to the company’s shareholders.
According to Hansson, the Suezmax tanker market is strong at the moment and the upswing in Suezmax tanker rates in the recent past may have been influenced by the decrease in the oil price.
“We believe that there are positive signs in the market for Suezmax tankers. With this letter I wish to make it clear that a lower oil price is contributing positively to our business beyond the effects of changing trade patterns and constrained Suezmax tanker supply growth. We remain cautious as always but we believe we see some bright spots on the horizon,” Hansson explained.
“The most significant impact of a lower oil price is an increase in oil demand. Lower prices may trigger stockpiling or have a more general positive impact. A saving of USD 20 per barrel equates to savings for the US of about USD 55 billion annually. Such an oil price decrease has the same effect on the overall economy as a tax reduction,” he went on to say.
As there is a significant domestic oil production in the US at the moment, there is an increase in volumes of oil being transported boosting demand for Suezmax tankers.
Speaking of the outlook, Hansson believes that the Suezmax fleet could shrink over the next few years.
“The improved rates earned in 3Q2014 have continued into 4Q2014. This is also a reflection of higher total fleet utilization. Based on the world Suezmax tanker orderbook, supply can be expected to remain constrained in the near term, which is positive for our business,” NAT CEO said.
Press Release; Image courtesy: DN GL/Damir Cvetojevic