Higher US crude exports to support VLCCs in 2023

In its latest Tanker Opinion piece, Poten & Partners forecast a further strengthening of US crude export volumes along with shifts in destinations that could reshape the VLCC, aframax and suezmax markets.

While the 2022 US crude export landscape was shaped by a huge release from the Strategic Petroleum Reserve (SPR) and sudden European demand as Russia fell from favour, 2023 will be marked by continued growth in US production and flat demand.

The IEA puts US oil production at 950Kb/d higher for the year topped up by some SPR sales, albeit it much lower levels than in 2022.

“US infrastructure is well equipped to handle increased exports, although more of the additional barrels may move from Houston because the pipelines to Corpus Christi (currently the most popular export facility) are nearing capacity,” said Poten.

As well as a change in export facility, Poten expects a shift in crude export destinations for 2023. The additional volumes this year may find their way to Asia, and more specifically China as its economic activity ramps up again following the end of the zero-COVID policy. China’s 900 Kb/d increase in demand is on par with the forecast US production increase.

Extra long-haul volumes to China will be good news for VLCC tonne-mile demand and rates, but could price VLCCs out of the transatlantic trades, said Poten, reopening the market for suezmaxes and aframaxes.

Poten & Partners’ Tanker Opinion archive is available on their website.

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