The Hellenic Shipping News warns “Tanker Owners Could be in For More Pain”. The tanker market is bound for a revival. But when this will happen is just speculation. The shipbroker Gibson said that “the announcement that a Covid-19 vaccine developed by Pfizer/BioNTech is over 90% effective in trials sent world equity markets and oil prices soaring earlier this week”. However, this news has not changed the near-term oil supply and demand fundamentals.
The vaccine is unlikely to boost the global economy. Because by the end of 2021, global oil demand will be affected by COVID-19. The virus resurgence in many countries prompted the IEA to drastically revise down its demand expectations. Global oil demand in Q3 2020 has been revised down by 0.4 million b/d. Also Q4 2020 fell 1.2 million b/d day and Q1 2021 0.7 million b/d.
In addition, Chinese oil demand is currently above pre-pandemic levels. While we expect India’s oil demand in Q4 2020 to be slightly lower than the Q3 2019 level on average. Libya has surprised the world while demand for OECD continues to suffer. According to Gibson, Libya is rapidly ramping up its crude production. It did so after the truce agreed between competing forces. According to Reuters, the country’s production has reached 1.2 million b/d. If in August it was only 100,000 b/d.
Under the April agreement, they predict that OPEC + production will increase by 2 million b/d by 2020. The oil ministers will meet on November 30th and December 1st to discuss oil policy. And concerns are mounting that such a large increase in production is no longer an option. The OPEC President stated that “in the context of slow growth in oil demand, the market would struggle to absorb the production increase expected at the start of the year”. This indicates an increase in current production decline in the first half of 2021.
“The market consensus for the likely outcome of the upcoming OPEC+ meeting is for an extension of current production quotas,” the shipbroker said. For the crude tanker market, maintaining current production quotas only adds to the current pain for tanker freight ships owners. But this is only if analysts’ predictions are correct. Will this be the case? Time will tell. For now, all eyes on OPEC+.
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