The good times are here to stay for product tanker owners, despite fears over hits to fuel demand as pump prices rise and economies tilt into potential recession.

French shipbroker Barry Rogliano Salles (BRS) said earnings for clean carriers have been flying high as peak fuel demand season approaches in the northern hemisphere.

But in its latest weekly report, the Paris shop has examined whether there will be a “sting in the tail” this summer.

The latest weekly figures from the US Energy Information Agency suggest that petrol demand slumped below average levels during the second half of June.

BRS put this down to soaring prices.

And there is also mounting evidence that a similar picture is emerging across Europe as commuters leave their cars at home.

“Nonetheless, we continue to project an increase in vehicle miles travelled over the summer which will be driven by pent-up demand from leisure travel in the northern hemisphere following two years of Covid disruption,” BRS said.

Government help on fuel prices through duty cuts and subsidies is also supporting the outlook, the broker argues.

Last week, the Indian government announced that it will introduce export duties on supplies of jet fuel, petrol and diesel to ensure adequate domestic supply.

India is the world’s fourth-largest refiner with an output of around 6m barrels per day (bpd).

It is also a significant swing exporter, shipping 1.5m bpd of high-specification clean products east or west as pricing signals dictate.

Indian and Chinese exports to hold up

“Despite the duties, it remains uncertain whether Indian clean product exports will fall back, especially as Reliance’s mammoth 1.2m bpd export-orientated Jamnagar complex is reportedly exempt,” BRS added.

China remains the largest “grey swan,” the broker believes.

But fears of a ban on transport fuel exports are receding, BRS said.

This would be an attempt to maintain low prices and support domestic supply.

But, considering that Chinese demand remains around 700,000 bpd below its 2021 level and a tranche of new Chinese refining capacity is set to be commissioned over the coming months, the brokerage sees no significant pressure on current or near-future product supply.

Inventories run low

“We do not envisage a swift return to pre-Covid Chinese oil demand, which suggests that the country’s product exports should remain supported across the summer,” BRS said.

And transport fuel inventories remain extremely low in OECD countries.

“As such, we continue to anticipate strong demand for imports to replenish these over the coming months which should sustain clean tanker demand,” BRS argued.

“Clean tanker markets are likely to remain strong over the short-term. Indeed, even if the worst fears of a global recession are realised, we believe that the need to ship product across longer and longer distances and replenish inventories should support tanker demand even if end-user demand surprises to the downside,” the broker concluded.