VLCC Floating Storage Set to Dwindle

Image Courtesy: NITC

The number of very large crude carriers (VLCC) engaged in non-trading activities, primarily Iranian/non-Iranian crude storage and fuel oil storage, has started to slip, according to the latest tanker report from Gibson Shipbrokers.

Namely, at the end of February, 45 VLCCs were involved in various non-trading activities, down from an average of 52 units seen between July 2016 and January 2017, the report figures show. As indicated, Iranian crude storage has started to decline rapidly a few months ago but up until February this was offset by robust non – Iranian crude storage.

Despite the latest drop, VLCC floating storage remains substantial, representing around 6.5% of the global VLCC fleet. However, Gibson predicts that the downward trend is likely to continue, bringing bad news for VLCC owners in the short term.

This is further prompted by the return of the National Iranian Tanker Company (NITC) ships to the international market following the sanctions lifting. In addition, the anticipated drawdown in stocks and flirtation with backwardation makes it less attractive to use tankers for storage, Gibson Shipbrokers said.

The development comes following OPEC’s decision in November 2016 to cut production by nearly 1.8 million b/d, with the aim of rebalancing the oil markets and reducing massive oil inventories, accumulated in recent years.

“Although this strategy will support prompt oil prices, drawdown in stocks and easing forward oil prices threaten floating storage,” the report reads.

In January, the Middle East OPEC crude production fell by a colossal 1 million b/d compared to December levels, data from the International Energy Agency show, and initial Reuters estimates indicate that these cuts were somewhat further reinforced in February.

“As the Middle East is by far the largest market for VLCCs, the decline in crude exports at a time of rapid growth in fleet size is starting to hurt tanker owners. VLCC spot TCE earnings on the benchmark Middle East – Japan route started March at around USD 20,000/day, down gradually from USD 50,000/day in early January,” the report further reads.

 

Share this article

Follow World Maritime News

In Depth>

Events>

<< Feb 2018 >>
MTWTFSS
29 30 31 1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 1 2 3 4

Shipping 360

This course is ideal for those who have recently joined the maritime sector and those who need to have a better understanding…

read more >

APM – ASIA PACIFIC MARITIME 2018

27 years in the making, APM is the premier shipbuilding & marine, workboat and offshore exhibition in Asia trusted by generations of industry professionals.

read more >

Shippax Ferry Conference 2018

The two-day onboard ferry conference was first organized in 2003 and grows ever more popular with some 400 delegates from over 40 ferry…

read more >

8th Dredging & Land Reclamation World Summit 2018

The 8th Dredging and Land Reclamation Summit 2018 will gather the decision makers from Authorities and Operators responsible for ports…

read more >