Firstly there was the issue of oil production, she said, where export volumes had declined in areas west of Suez, notably in West Africa and Latin America. This had meant that a large number of Suezmaxes normally serving those trades had migrated to Middle East Gulf, the extra capacity more than offsetting increases in oil production from countries such as Iran, Iraq and Saudi Arabia.
Net effect of this more concentrated deployment of the large tanker fleet into just one, albeit expanding, market has been less volatility or “spikiness” of freight rates, she said, because “MEG (Middle East Gulf) cargoes have always been likely to find a ship this year”.
Secondly, there is the often-overlooked factor of a speeding up of the large tanker fleet, Betsakou continued. This occurred around Q1, to capitalise on very favourable market conditions at the time, and has largely persisted ever since, increasing fleet capacity yet further.
Finally, there has been a lack of port congestion this year compared to last which has also served to boost available capacity while removing the uncertainty factor that inflated rates in 2015.
Looking ahead, the year’s peak deliveries are now scheduled to come on stream in Q4, with 24 VLCCs and 17 suezmaxes due for handover – although maybe as many as 50% of these could carry over into January 2017 on account of slippage, said the Howe Robinson analyst.
Large tanker rates are therefore like to fall off further in the immediate near term, cautioned Betsakou, leading her to counsel that any owner looking to lock in, say, a one-year time charter would be well-advised to “do it now, because it will be better than in January.”
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