Gibson: New OPEC Cuts to Extend VLCC Woes

Image Courtesy: Agritrade Resources

The very large crude carrier (VLCC) market could experience a downturn, which is likely to accelerate in the short term, on the back of OPEC’s extension of production cuts.

OPEC and a number of non-OPEC producers earlier informed of their decision to extend production cuts to March 2018. Cutbacks largely originate out of the Middle East, where most VLCC trade comes from.

During the first five months of this year, VLCC spot earnings on the benchmark trade from the Middle East to Japan averaged USD 27,000/day, less than half the level of TCE returns witnessed over the same period last year, according to a report from Gibson Shipbrokers.

Although USD 27,000/day “is still not bad by conservative estimates,” extending cuts for another nine months will coincide with continued rapid growth in the tanker fleet.

Between now and the end of March 2018, 34 VLCCs are scheduled for delivery, while 25 tankers have already been delivered since the beginning of the year. Although slippage in terms of delivery dates is likely to continue, the market will see a robust growth in the VLCC fleet size.

Furthermore, if OPEC succeeds in its intention to rebalance oil markets, this will translate into a further decline in VLCC floating storage, a big support factor to the market since early 2015, Gibson Shipbrokers informed.

“The next nine months may prove to be not as bad for VLCC owners as some feared. However, as always is the case, the future fortunes do not only depend on the market fundamentals, but also owners’ confidence or the lack of it.”

Share this article

Follow World Maritime News

Posted on June 5, 2017 with tags , .

In Depth>


<< Mar 2018 >>
26 27 28 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 29 30 31 1

Singapore Maritime Technology Conference and Exhibition (SMTC) 2018

The 3rd Singapore Maritime Technology Conference and Exhibition (SMTC) 2018 is organized by the Maritime and Port Authority of Singapore…

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 >

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 >