Ridgebury Tankers chief executive Bob Burke says markets will have a tough time absorbing all the new crude tanker capacity being delivered over the next two years. Suezmaxes, in particular, bear the brunt of the rate pain due to ongoing disruptions in trans-Atlantic trades.

Burke's assessment was delivered during a panel discussion at the Hellenic-Norwegian Shipping Conference in New York. His outlook on clean tankers was more positive as low rates prompt more arbitrage trades.

Dirty tanker rates starting deteriorating in the second half of last year as more vessels started hitting the water. Ridgebury's operating earnings in the second half of 2017 fell compared to the first half due to the rate deterioration, Burke noted. He did not provide specific results for the privately held company.

A reversal in rates appears difficult as somewhere between 14% to 18% of the crude tanker fleet is delivered over the next two years, he said.

"Brokers say that's manageable," Burke said. "I don't even know what that means."

"It doesn't take a lot of change in capacity to move the market one way or the other," Burke said.

The major challenge to the tanker markets this year is the ongoing capacity cuts from Opec and non-Opec producers. George Belesis, a chartering and sale-and-purchase broker at Poten & Partners on the panel, says there was initial scepticism regarding producer compliance on the cuts. "But so far, they seem to be implementing them.

"It's having an adverse effect on freight markets," Belesis said.

Burke says VLCCs have held up relatively well, but suezmaxes face the most difficulties. Spot rates in that segment are currently running between $10,000 and $11,000 per day.

Cargo activity out of Nigeria continues to challenge suezmax demand. Despite the country pledging to increase output, producers still face ongoing force majeueres. Asian charterers out of West Africa are also preferring VLCCs over suezmaxes thanks to greater economies of scale.

"The suezmax market has just fallen to pieces," Burke said.

Clean tankers 'more positive in short-term'

Burke says clean tanker supply over the next two years will be more manageable relative to the crude sector.

Rates there have also weakened, but Burke says that creates more trading opportunities, which is ultimately positive for vessel employment. Plus, changing rules on emissions and global imbalances in different types of refined products also create "more opportunities for clean tankers."

"I'm more positive on clean tankers in the short-term," Burke said.