Poten: North Sea Crude Oil Market Shifting to Larger Tankers

Euronav tankerIllustration; Image Courtesy: Euronav

Very large crude carriers and Suezmaxes have taken a larger share of North Sea crude oil exports over the past two years, a market which has traditionally been dominated by Aframaxes.

VLCC represent 9% of the trade since January 2018 and Suezmaxes have increased to 38%, from previous 7 % and 36 % respectively, Poten and Partners said in a weekly market review. This reduced Aframax demand to 50% of the total.

“It should not be a surprise that the market share of the various tanker segments is shifting. Increasing production from the North Sea is met with stagnating European oil demand. This leads to more exports to longer-haul destinations across the Atlantic and in Asia,” Poten said.

“Not surprisingly, exporters will use larger vessels to be competitive with Middle Eastern, West African and U.S. barrels. “

As explained, VLCCs have two main destinations for North Sea crude in Asia, those being China and Korea, with occasional deliveries to other destinations like Thailand, Malaysia and Taiwan.

Suezmaxes, on the other hand,  have a more diverse group of destinations, including the United Kingdom and the Netherlands, followed by Norway, Germany, Sweden, France and Denmark. Across the Atlantic, both the U.S. and Canada regularly receive Suezmaxes with North Sea crudes.

Despite the fact that the North Sea is considered a mature region, the outlook for production and exports in the coming years is positive as the IEA expects renewed growth in the area.

“Projects that were undertaken both before the collapse of oil prices in 2014, and more recently in the case of Norway, slowly come online. New projects are also expected to provide a significant boost to Norwegian output in the medium term,” Poten said, adding that the total oil output is forecast to grow by 450,000 b/d to 2.4 mb/d by 2023, the highest level since 2008.

The IEA is less optimistic about the UK, as there is a risk of sharp declines in investment in the near future, despite a good short-term outlook.

“The implications for the tanker market of these changes are mostly positive. More North Sea output will lead to more exports and as European oil demand is expected to be fairly stable, the incremental barrels will be moved over longer distances, stimulating ton-mile demand, in particular for Suezmaxes and VLCCs,” Poten concludes.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Feb 2019 >>
MTWTFSS
28 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

GREENTECH IN SHIPPING GLOBAL FORUM

The mindset of sustainability and efficiency is the key to unlocking successful business…

read more >

LNG2019

LNG2019 features the largest number and highest level of LNG industry leaders.

read more >

Singapore Maritime Week (SMW) 2019

very year, SMW gathers the international maritime community for a week of flagship conferences…

read more >