If Lars Barstad has a favourite day, 9 September might be in the running.
Historically, that is the day the tanker market starts to pull itself out of its annual summer swoon to begin capitalising on the seasonally stronger second half, the Frontline chief executive told Pareto Securities’ Energy Conference, citing research from his own company.
“That’s just statistics, but there are two things that gives us confidence here,” he said in Oslo on Thursday.
“Overall, volumes are increasing and they’ve started to increase already. Inventories globally are actually super-low, so you have no cushion for an adverse effect.
“There’s nothing here to tell us that this should not move.”
Another factor Barstad pointed to was fleet supply.
He said the total number of ships trading globally is still growing, but so is the proportion of ships older than 20 years, even when newbuilding deliveries are taken into account.
Many of those vintage ships have transitioned into the dark fleet — a longtime bugaboo for the head of John Fredriksen’s stock-listed tanker outfit — taking them out of mainstream trading entirely, as owners and charterers will not touch them after they break sanctions.
Barstad said up to 23% of aframaxes, suezmaxes and VLCCs globally trade in the dark fleet, meaning they are controlled by opaque companies, flagged in unusual jurisdictions and insured by non-traditional companies in an effort to move Russian, Iranian and Venezuelan oil.
“The minute something happens to this market, you are not able to trade around with sanctioned ships,” he said “This market is going to be extremely tight.”
On Monday, 9 September, the Baltic Exchange’s VLCC time charter equivalent assessment read $31,554 per day, before jumping to $34,734 per day on Wednesday.
But this year the upturn may have begun a little earlier than Frontline’s projections.
The assessment reached a year-to-date low of $26,257 per day on 30 August and had ticked up to $26,489 per day by 3 September.
But then rates took off, making gains each day since.
