French shipbroker Barry Rogliano Salles (BRS) has warned suffering tanker owners not to pin all their hopes on Saudi Arabia turning on the crude taps.

The Paris shop noted stronger demand for VLCCs in the Middle East, with all signs pointing to further improvements in vessel use this year.

“Considering that almost 80% of Middle East crude exports are carried by VLCCs, this implies that this segment stands to benefit the most from the Middle East increasing its share of global oil production,” BRS said.

But the broker argued that not all incremental production will lead to a greater need for spot ships.

On paper, Saudi Arabia accounts for 50% of the output increase due from the region in 2022, BRS calculates.

However, considering that the kingdom exports the majority of its crude on VLCCs controlled by state shipping company Bahri, this will not add to spot tanker demand, the broker said.

Instead, this will have to be boosted by demand from the UAE, Kuwait and Iraq, whose combined output hikes should total 1m barrels per day by September, the company added.

Uninspiring

The spot VLCC sector has continued its uninspiring trend this week as various factors ranging from increasing bunker prices to limited cargoes being quoted weighs heavy on sentiment.

Earnings from the Middle East have also reached new lows.

The arrival of cargo nominations for the first 10 days of February saw rates losing Worldscale (WS) 1.5 points to sink to WS35.

This equates to an average time charter earning equivalent of minus $5,300, according to UK shipbroker Howe Robinson Partners.

The company said there are minimal enquiries for ships.

A continued lack of cargoes in the Atlantic region is also sending tankers in ballast towards the Middle East.

Clarksons Platou Securities said rates were unchanged for eco VLCCs at $9,700 per day on average.

One Clarksons broker noted charterers in Asia will want to cover requirements in the next few days ahead of the Chinese New Year holiday.

This could spur some activity, but rates are not expected to move significantly.