The International Energy Agency (IEA) has equities analysts feeling bullish about tankers.
The Paris-based organisation’s annual report published on Wednesday said significant oil refining capacity will be added in the east, while most crude production will come from the west — a positive sign for tonne mile demand, Fearnley Securities‘ Oystein Vaagen said.
“The distance side of the tonne-mile equation is set to grow further and sets up a very bullish backdrop for the tanker space,” he said in a note published on Thursday.
“And remember, this stacks against the lowest orderbook to fleet ratio since the early 1980s and largest phaseout potential since the early 2000s.”
Vaagen added that tanker stocks were still trading at a discount to net asset value.
The largest refining capacity growth is set to come in China and India, according to the IEA and noted by ABG Sundal Collier analyst Petter Haugen.
The former is expected to add 1.8m barrels per day in capacity between 2022 and 2028, while the latter 1.2m barrels per day over the same period.
Both countries are net crude importers, but net product exporters.
Haugen said the data can be used as a proxy for crude oil flows.
“Sure, there are other factors which could change making the net effect for trade less positive, but the simple fact that the largest additions of refining capacity is taking place in regions which today are net crude importers ... is still a positive,” he said.
The IEA data showed the only other country or region adding comparable refining capacity is the Middle East, with an estimated 1.2m barrels per day coming online in the next four-and-a-half years.
The region is both a net crude and net product exporter.
Haugen said that would likely be a drag on crude oil exports, “but it will still likely require more product tankers”.
He said he would not be surprised if the IEA raises demand or US supply growth forecasts in coming reports.
The IEA said global demand will shoot up to nearly 106m barrels per day in 2028 — growth of 5.9m barrels per day from 2022.
US oil supply growth predictions were more muted, with 1m barrels per day added from 2024 to 2028.
Haugen said US supply was a concern, but that demand declines in the US would release more barrels for export.
