US sanctions against Iran are “really biting” in the crude tanker marker, according to Euronav chief executive Paddy Rodgers.
New York-listed Euronav says there are currently 14 inactive Iranian VLCCs, which will create the need for tonnage from the wider market.
This additional demand is expected to increase and then be maintained as the sanctions are are fully applied from next month, Euronav’s third quarter report said.
"Iranian sanctions are really biting, meaning that oil is being sourced from further away from the end user,” Rodgers told Bloomberg TV.
“We are seeing US exports increasing and that is really good for driving the distances over which our tankers sail and therefore our earnings.”
VLCC rates reached $54,000 per day on Monday, with world scale 100 reported, according to Clarksons Platou Securities.
Euronav, which reported a third quarter loss today, says demand for crude remains robust despite a higher oil price and rising trade tensions between China and the US.
At the same time 36 VLCC have been scrapped this year, including seven in the third quarter, helping to balance the market.
It explains trading momentum built through the third quarter and continues in the present quarter, helped by seasonal flows and the developing Iranian situation.
However, Euronav offered three caveats to a more positive outlook for the tanker market.
It pointed to higher oil prices and trade tensions constraining global GDP growth, fragility among some key oil producers and the sustained delivery of VLCC newbuidings during the next 12 months.
Euronav reported a loss of $58.75m for the third quarter, a performance analysts say is largely in line with expectations.
According to Arctic Securities the 56% of Euronav VLCC spot days fixed at $27,000 per day and the 53% of suezmaxes chartered at $19,200 per day for the fourth quarter were below expectations.
“We expect the remaining days to be booked at substantially higher levels given the recent rate developments” the analysts added.
