VLCCs face a flat earnings outlook through the end of next year as newbuilds weigh on rates and smaller tankers steal cargoes, according to Braemar ACM Shipbroking.
Braemar's global head of research Henry Curra delivered his views to attendees of the Connecticut Maritime Association's Shipping 2017 conference. He say strong freight rates during 2014 and 2015 were the result of low crude oil prices spurring refinery demand.
But with crude oil prices rising sharply last year, refinery margins were pinched, as was demand for seaborne trade. At the same time, a massive wave of tanker supply came to the market.
He says the VLCC fleet over the last two years has grown from 500 to 700 ships and the suezmax fleet grown from 300 to 500. While global oil demand growth of 1.4 million barrels per day remains steady and overall healthy, more ships are fighting over the relative same amount of cargoes.
There is "increasing competition between sectors of the tanker market," Curra said. The rate outlook reflects "how damaging the suezmax orderbook is to VLCCs and aframaxes."
Curra sees VLCCs earning $27,000 per day this year, with small growth to $28,000 per day next year. Suezmax rates are expected to move from $20,000 to $22,000 per day.
