The Libyan oil shutdown and US hurricanes are conspiring to lower oil prices and boost tankers.
Fearnleys said projections from the US Energy Information Administration (EIA) and the Paris-based International Energy Agency suggest the oil market will be oversupplied, with the EIA estimating a 200,000 barrel per day excess.
“It should lead to somewhat lower oil prices — all else equal supporting long-haul freight,” analyst Fredrik Dybwad said, referring to the EIA’s updated numbers published on Tuesday.
“Further, with the non-Opec growth stemming from the Atlantic and incremental demand growth in the East, the thesis of strong ton-mile growth for VLCCs remains firm.”
The scenario “leaves limited room for a reversal of Opec+ volumes to the market” but he noted that it is not necessary for a strong VLCC market moving forward.
The EIA’s figures, published in its Short-Term Energy Outlook, put global oil demand at 104m bpd against supply of 102m bpd.
The production figure was down thanks to Libya shutting down production for a month in September, plus issues from US hurricane season.
Libya had been producing 1.2m bpd, with 460,000 bpd due for export, according to data from Kpler.
VLCC rates have largely been climbing for several weeks, rising from a 2024 low of $26,257 per day on 30 August to $41,226 per day on Tuesday as the market pulls out of the summer downturn and tensions between Iran and Israel create uncertainty in the market.
Many market observers predict VLCC rates in the six-figure region — a level not seen since the spring of 2020 — as Opec and its allies appear set to produce more oil.
The shift away from production cuts to maintain prices and towards defending market share is expected to put more VLCCs on the water and boost rates.
The asset class has largely trailed its smaller counterparts following Russia’s invasion of Ukraine and the subsequent reshuffling of oil markets as Western buyers shunned Russian barrels.
On Tuesday, Tankers International recorded three fixtures, all out of the Middle East Gulf.
The 307,900-dwt Trafigura-managed CSSC Liao Ning (built 2020) was fixed to NSRP for $31,070 per day for a voyage to Vietnam, while the 299,000-dwt Front Osen (built 2016) was chartered to Formosa Petrochemical Corp at $30,778 per day to sail to Taiwan.
The richest was the Dynacom-linked 296,700-dwt Kalliopi (built 2010), earning $39,855 per day for a voyage to the eastern coast of India for the Indian Oil Co.
All three ships will load in late October.
