Over the next three months clean and dirty tankers across the globe will face challenges due to lower oil trade flow, weak refining margins and lingering supply cuts, and will be looking for longer voyages from places such as Guyana, to keep their ships occupied.
From Genoa and Copenhagen to Singapore and from Oslo to Mumbai, analysts and market participants told S&P Global Platts that there could be an occasional rally in the near term freight only to be quickly followed by a correction. The period of stress is expected to be from April to June.
Higher freight and better tanker market for owners is more likely in the second half of the year rather than the second quarter, said Genoa-based Enrico Paglia, a senior analyst with Banchero Costa, a global shipping brokerage and consultancy.
“Tankers are upbeat in general as global demand recovers but with OPEC+ production cuts, they will struggle for the next three months,” said Ole-Rikard Hammer, Oslo-based senior analyst with Arctic Securities.
Around three Suezmax-sized cargoes load in Guyana each month, a pattern seen since October 2020. These cargos are lifted for ExxonMobil, operator at the Stabroek block, co-venturers Hess and CNOOC, and the Guyana government, representing each stakeholder’s share of crude from the Liza Phase 1 Development.
“Tanker owners are looking for longer voyages to keep their ships occupied such as from Europe to India where some North Sea crude barrels have been purchased but the volumes are meager,” Platts said. “It is the South American crude grades from Guyana, Colombia, Ecuador and Uruguay that can keep the VLCCs occupied for longer voyages in the coming months.”
Guyana continues to take precautionary measures at offshore installations in response to the global pandemic which has seen tankers lifting the Liza crude being required to arrive well ahead of time for each lift, in keeping with quarantine protocols.
Natural Resources Minister, Vickram Bharrat, has said that tankers now have to arrive in Guyana two weeks prior to the date of each lift, in keeping with the country’s quarantine regulations.
“Travel restrictions, lockdowns and a slow vaccine rollout mean that a strong enough recovery in demand to help the tanker shipping market still seems something that cannot be expected in this quarter,” said Emily Stausboll, BIMCO’s Copenhagen-based shipping analyst.
Suezmax loadings of Liza crude entered the market at a time when typical Caribbean loadings have slowed amid US sanctions on Venezuela that were imposed in January 2019, which has left Covenas, Colombia, the only major export port in the region.