How Opec reacts to oil price low critical for the tanker market

Suezmax and aframax earnings followed suit to averages of $30,000 and $31,000 a day according to Clarkson Research figures.

Product carriers followed suit with $36,000 a day paid for LR2 voyages Gulf/Japan. Atlantic MRs topped $20,000 a day on some routes. Dirty products carriers earned over $20,000 a day on US Gulf trades.

The rally in the crude market has continued into this week with rates continuing to rise. Plenty of cargoes in the Gulf and tightening tonnage availability have seen to that.

However, how Opec reacts, at its end November meeting, to oil prices hitting a four-year low, will have a critical impact on the market. For the time being, Saudi Arabia, Opec's largest producer, has kept the taps open, slashing the price of contracted oil to the US in a bid to outmuscle shale oil producers who have contributed to falling US crude imports. Near-US producers like Mexico,

Venezuela, and Canada will also have been hit.

According to the US Energy Information Administration, total U.S. crude oil production averaged an estimated 8.7m barrels per day (bpd) in September, the highest monthly production since July 1986. Total crude oil production, which averaged 7.4 million bpd in 2013, is expected to average 9.5 million bpd in 2015. If realised, the 2015 forecast would be the highest annual average crude oil production since 1970.

Some Opec producers will want the cartel to cut production in an attempt to support prices, as opposed to Saudi Arabia's apparent policy of trying to defend market share.

Opec is about to publish its latest World Oil Outlook which will no doubt give further indication of its strategy in the short to medium term.