Singapore shipowner Hafnia expects the European Union’s refusal to import Russian fuel will more than double the need for MR tankers.
The tanker company’s chief executive Mikael Skov told a conference call that Europe continues to import “quite a large share of its diesel” from Russia.
Hafnia’s calculations using satellite data suggest the EU is still bringing in about 1m barrels per day (bpd) of products.
This means about three-and-a-half MR discharges per day, involving trips of 15 days on average and equating to 50 MR equivalents for the trade.
“From 1 February, the likely scenario is that Europe will have to buy its diesel from the US Gulf or the Middle East — at least a doubling up of voyage distance, so instead of using 50 MRs to supply, we believe it will take 100 MRs,” Skov said.
“The other side of the coin is that in addition to this, we expect Russia will continue to refine and export and [cargoes] will travel towards Latin America and Africa, maybe Asia.”
Russian exports to these destinations will also probably require a more than doubling of the capacity being used today, Skov believes.
The world MR fleet numbers 1,500 ships, so the increase could be “a good 7%” of this, he said.
“The market is already tight. That is a significant impact on the market,” Skov added.
The Danish boss still sees a “fair gap” between long-term time-charter interest and spot earnings.
The market is currently in a seasonally low quarter, but the Hafnia CEO expects things to accelerate again.
“The period market has picked up significantly,” Skov told the call.
Activity will increase “once everyone is back from holidays and realises that the market is going to be tight”, he added.
His comments came after the BW Group-owned company, listed in Oslo, reported second-quarter profits of $186.2m, up 774% from $21.3m in the same period a year ago.
Revenue climbed from $267.3m to $467.8m in what Skov described as a “solid summer” for clean tankers.