Fresh cuts from Opec in Vienna this week will not ruin the VLCC rate recovery, according to major owners in the sector.
The cartel is widely expected to turn down the taps to help address a slump in the price of oil since it agreed to boost production this summer.
Jeff Pribor, chief financial officer of International Seaways, said the upturn in tanker rates this winter had allowed owners to eat the cake created by a reduction in global inventories.
“There has been icing on the cake for two months as the result of some actions by Saudi Arabia to keep the world supplied with oil – maybe too well supplied given the nature of the waivers on sanctions with Iran,” he said.
“Maybe the icing is off the cake for a little while, but the cake is still there,” he told the Nordea shipping and offshore conference in London today.
Greek shipowner Nikolas Tsakos said any cut from Opec would impact tanker demand in the spring. “But in a sense this is a positive thing,” the Tsakos Energy Navigation chief executive said.
“What we would like to have is a normalised spot market where rates are at a level which give us a good long-term return, rather than $100,000 per day for six months and minus $10,000 for the next six months,” he told the conference.
“So, maybe it will put some damper on some people who might be thinking of ordering ships speculatively.”
Trygve Munthe, co-chief executive of DHT Holdings, described a possible dip in Opec output as an inconvenience that would impact the market short-term.
“Since the Vienna meeting in June global supply is up around 1.8 million barrels per day,” Munthe said.
“We have felt the benefit of it, but the oil price has fallen off a cliff so 1.8 was maybe a little too much, too quick.
“So, there is a little bit of fine tuning and we are going to feel that in the second quarter next year. But after that it is looking quite exciting.”
Euronav chief executive Paddy Rodgers said the market was looking good presently.
While he expects a drop in the second quarter next year, preparations for IMO 2020 legislation are expected to bring a boost in the second half.
“Twenty-nineteen could be a real dark horse year. This could be the year we really take off,” Rodgers said
