US-led plans to release crude oil from its strategic reserves is unlikely to be negative for tankers, a top shipping investment bank has said.
On Thursday, US president Joe Biden said the US would release 50m barrels from the Strategic Petroleum Reserve (SPR) as part of a coordinated global effort with other major oil consuming countries to lower oil prices.
"Demand for oil is higher than current oil supply, resulting in a backwardation in the oil market," Clarkson Platou Securities said.
“Strategic stock releases are therefore unlikely to be negative for tankers unless lower oil prices were to make Opec+ change their strategy of producing more oil.”
"In our view, this is unlikely to happen if prices only drop a few dollars per barrel," analysts Frode Morkedal and Omar Nokta said.
However, the two analysts said destocking of oil inventories have been "bad for the tanker market this year".
"Instead of importing more barrels, China, as an example, cut crude oil imports by 7% and instead lived off their inventories built up last year," they said.
But the tide might already be turning.
"The International Energy Agency [IEA] said last week that inventory draws appear to be ending and could soon lead to inventory builds due to rising oil production," Morkedal and Nokta said.
"If Opec+ were to completely unwind its cuts, global oil production could gain 6.5m barrels per day [bpd] in 2022, with Opec+ up by 4.5m bpd and non-Opec+ rising by 1.9m bpd of which US oil is expected to account for 60%, which would be positive for tonne miles."
Morkedal and Nokta said the IEA forecasts oil supply could outpace oil demand from the first quarter of 2022 and this could, in their view, lead to a contango situation again, with build-up of inventories being a very positive dynamic for the tanker market.
"In our view, looking beyond the effect of a temporary strategic stock release, we believe we are near a real change of fortunes for tankers with restocking of inventories expected to support tanker demand in the years to come," the analysts said.
The US release will comprise a loan of 32m barrels and the sale of 18m barrels, shipbroker Braemar ACM Shipbroking said in a note on Wednesday.
The loan of 32m barrels will be drawn down during the first four months of 2022, with the option of early deliveries in late December 2021 and companies will return the crude in 2022 to 2024.
"India confirmed it would release 5m barrels of SPR versus 38m barrels of crude in their reserves and Japan said that they would release 'a few days' worth of stocks and consider adding more later on," Braemar ACM said.
"South Korea, the UK and China agreed to join in the coordinated release but details on the volume and timing of reserve are still tentative."
However, Opec+ delegates said that the release of millions of barrels of oil is "unjustified" under current market dynamics and they may not restore as much crude to the market when they next convene on 2 December.
