US-listed tanker companies Nordic American Tankers (NAT) and DHT Holdings saw their shares falling by double digits yesterday, down by more than 12% and 11% respectively, following the surprise announcement by OPEC+ to cut production by 1.16m barrels per day (bpd) for the rest of the year.
DHT Holding’s fleet consists entirely of VLCCs the sector tipped by analysts to be most impacted the cuts.
The OPEC+ decision came on Sunday following a virtual meeting of the OPEC+ ministerial panel, which includes Russia. Further cuts, on top of the 2m bpd reduction in place until the end of the year, had not been expected. According to calculations by Reuters, the latest reduction the total cut in oil output to the equivalent of 3.7% of global demand.
The oil producing cartel has agreed that Saudi Arabia will slash production by 500,000 bpd, the UAE by 144,000 bpd, Kuwait by 128,000 bpd, and Iraq by 211,000 bpd. Other OPEC members will initiate smaller production cuts.
Analysts expect that the recent tanker rate rally, which has seen some six-figure VLCC fixtures, will ease. However, they point out the switch away from Russian crude has boosted tonne miles and this is not expected to change any time soon, if ever.
By 0800 hrs in London this morning, Brent crude was trading at $85.40, up by 0.75% on the day so far and an increase of 7% on Friday’s close of $79.77.
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