Frontline chief executive Lars Barstad believes charterers are going to have to be a lot more open about cargo requirements as tanker demand improves.

The boss of the John Fredriksen tanker company said he thinks the market is still challenged by the perception of inactivity.

"Sentiment is a strong force, but sentiment is nothing but the owners' subjective understanding of the position they are in," he told TradeWinds.

Barstad said that right now a significant amount of business is being concluded quietly, with charterers approaching owners with "surgical accuracy".

The CEO said Frontline is a big platform, well represented in the LR2, aframax, suezmax and VLCC markets, and it is the company's business to make the best-informed decisions possible.

"What we see right now is a lot of fixing activity under total radio silence. Owners will eventually wake up when volumes reach that critical point where charterers are finally forced to quote their cargoes more broadly to attract offers," he added.

"We might actually be there already looking at all the time charter interest that passes our desk these days."

Inger M Klemp is chief financial officer of Frontline. Photo: Gunnar Blondal

But the Frontline boss said the company is very reluctant to commit to long voyages at this point in the curve.

Broker McQuilling Partners had said on Monday that more VLCCs could return to the trading fleet if Opec+ stuck with its production increases of 400,000 barrels per day, which it duly did.

The ships could be needed due to consumers such as China craving more oil in the "energy crunch", the broker argued.

During August, McQuilling observed a slight uptick in the storage count, with the number of VLCCs assigned to floating storage increasing to 50, from 47 in the previous month.

Barstad said Frontline does not really see any spare VLCC capacity to be released into the market.

But he told TradeWinds that crude oil curves are in steep backwardation, with future prices lower than current ones, meaning it makes "absolutely no economic sense" to store anything.

The CEO said the only significant increase in storage numbers from September into October has been in Europe.

Speculative positions

"By the looks of it, this is caused by traders building speculative positions against an expected roll-up in oil prices as Asia reaches further for supply," he added.

Satellite tracking information by Clipper Data shows total floating storage at 50m barrels for ships sitting for three weeks or more.

This does not tally with reports of circa 50 VLCCs and is 10% below 2019 levels, the last normal year, Frontline believes.

"Stored oil in this market is more likely to be distressed crude, most likely due to origin. There are about 30m barrels sitting in South East Asia on vessels mostly disqualified from trading in the compliant crude market," the Frontline boss said.

The shipowner was not particularly surprised by Opec+'s decision to leave output unchanged.

"Production is not the same as exports, and as in particular the Middle East comes out of their peak demand season — for cooling — we may see a larger portion of the 1.4m barrels per day production increase since June be reflected in export statistics," Barstad said.