Discussing tanker market prospects on a Capital Link webinar, Tsakos, founder, chairman and ceo of TEN, talked about crises, in the form of the oil market volatility and the pandemic bringing opportunity.
After recounting the extraordinary tanker market volatility of March through May, he said “Now the market is taking into account the effects of overcapacity [as oil comes out of storage], it’s changing for the positive,” he said. Looking ahead, he said: “I think that the worst is behind us… in Q3 and in Q4, rates will be normalising. Rates [for VLCCs] will not go back to $100k [per day], but if we can see VLCCs at $50k- $60k it will be a very comfortable year for us.”
In explaining the higher relative strength in VLCCs versus smaller tankers, he said “There’s a larger concentration of VLCCs in storage trades.” In talking about aframaxes and suezmaxes, he said, “Right now, the one-year charter is significantly higher than the spot market…giving the expectation that everybody expects a good end of the year.”
His company strives for maintaining a diverse fleet. Later in the call, Tsakos hinted that the presently “VLCC light” TEN might be looking to invest in larger tankers going forward, even without employment “when the time is right”.
On financial strategy, he described a strongly anchored foundation where 45 vessels on fixed charters or profit shares serve to cover all costs, with “our 25 vessels in spot employment covering our shareholder dividends.” The mood has brightened in the past week. He added that the recent OPEC announcement of increased oil production (following its just concluded meeting) was a “welcome and timely development,” saying that: “I think that will start giving life to the market”.
Though demand is set to increase, albeit still at levels well below those previously anticipated for 2020- predicated in oil production around 100m barrels per day, much of the uncertainties concern the available supply of tankers in the marketplace (both spot and available for longer periods.
The TEN webinar came within a week of a recent Baltic Exchange webinar with participants including the tanker market analyst at one of the larger London ship brokerage firms, who expressed a worry that “with floating storage support removed, 2021 looks like a difficult year.”
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