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Uncertainties plague weak tanker market

The last quarter of the year has not started well for tanker owners. Spot rates on key routes are hovering at around breakeven, demand on major routes looks set to remain weak for some time, and there are prospects of more oil being pumped into a market where it’s not needed.

VLCC rates out of the Middle East remain low, both to east and west, and Suezmax units out of West Africa have fallen into serious loss-making territory, brokers said.

Considering that only a few months ago, investors piled into tanker stocks on a major buying spree, shipping’s most volatile sector has once again shown its unpredictability. And despite some secondhand buying interest, tanker values have lost significant ground over the last half year.

Hunter Group is understood to have sold two scrubber-fitted 300,000dwt VLCCs to ADNOC, on subjects. The 2019-built duo, Hunter Laga and Hunter Saga, were said to have achieved prices of $84m each. If the sale is concluded, the price is lower than might have been expected, brokers said.

The deal is notable in that it appears to be part of ADNOC’s previously announced plan to boost its tanker fleet by 25 ships, and is believed to be the state company’s first foray into the VLCC segment.  

Another tanker sale appears to confirm the downward movement in values. Recent reports indicated that the AET-owned 300,400dwt Bunga Kasturi Tiga, built by Japan’s Universal Shipbuilding in 2006, had been sold on subjects for $31m. The price is significantly lower than a negotiation earlier this year, which admittedly failed. At the time, the tanker was being negotiated at around $40m.  

Meanwhile another unknown may yet have a bearing on the tanker market early next year. One is Libya, where the country’s largest oil field, Al Sharara, could soon come back on stream, the National Oil Company indicated. Shut since January, the field normally produces more than 300,000 barrels a day, oil that is definitely not needed in today’s weak market. Could this create another contango market, and more floating storage opportunities, brokers pondered, and could it upset fragile OPEC+ export constraints?

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