Crude Oil Tankers: How Long Will the Market Run?...The Changing Face of Crude Tanker Trade . A...
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Crude Oil Tankers: How Long Will the Market Run?
Transcript of Crude Oil Tankers: How Long Will the Market Run?...The Changing Face of Crude Tanker Trade . A...
Crude Oil Tankers: How Long Will the Market Run?
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2013: The Dark Days
“SHALE REVOLUTION” SET TO GIVE TANKER OWNERS THE SHIVERS
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What a Difference a Year (And a Half) Makes Crude tanker rates are averaging the highest since 2008
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
USD
/ D
ay
Source: Clarksons
Average Aframax Rates Through First 5 Months of the Year
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What Changed? Declining fleet growth has helped…
6.5%
3.3%
7.0% 5.2%
1.6% 0.7% 1.0%
3.8%
-4%
-2%
0%
2%
4%
6%
8%
-100
-50
0
50
100
150
200
2009 2010 2011 2012 2013 2014 2015E 2016E
% F
leet
Gro
wth
(DW
T B
asis
)
Num
ber o
f Ves
sels
Source: Clarksons, Internal Estimates
Crude Tanker Fleet Growth Aframax Removals Suezmax Removals VLCC Removals Aframax Deliveries
Suezmax Deliveries VLCC Deliveries Crude Fleet Growth
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It’s The Demand Story, Stupid! …but the demand side often gets overlooked
73
74
75
76
77
78
79
Jan Feb Mar Apr May Jun
Mb/
d
Source: IEA
Global Refinery Throughput
2014 2015
7.5
8.0
8.5
9.0
9.5
10.0
10.5
20.5
21.0
21.5
22.0
22.5
23.0
23.5
Jan-13 Jul-13 Jan-14 Jul-14 Jan-15
Mb/
d (S
audi
Ara
bia)
Mb/
d (M
iddl
e Ea
st O
PEC
)
Source: IEA
Middle East OPEC Production Middle East OPEC Saudi Arabia
405060708090
100110120
USD
/ B
arre
l
Source: Reuters
Brent Crude Oil Price
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15
Mb/
d
Source: IEA
IEA’s 2015 Oil Demand Growth Forecast
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The Changing Face of Crude Tanker Trade A stretched fleet and increasing diversity of supply sources
Suezmax Trade Development 2012-15
Significant decline in WAF-US volumes due to rise in US shale oil production
Trade Growth Trade Decline
Size of arrow is proportional to tonne-mile demand generated
China and India sourcing more crude from S. America
European refiners taking more crude from W. Africa
More Suezmaxes trading long-haul from WAF-Asia
Increase in Suezmax loadings ex-MEG
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$13,000 / day
$22,000 / day
Strong Market Through 2015 / 16 Peaking in 2016; but next down-cycle expected to be shallow and short-lived
MAR
KET
CYC
LE
2015 Strong market - Limited fleet growth - High OPEC oil production - Low oil price stimulates demand - Chinese Stockpiling - Change in trade routes
2013 2014 2015 2016 2017
Illustrative Aframax spot rate forecast
2017: Increased Risk - Rising fleet growth to 4-5% - Global recession is overdue - Potential for higher oil prices,
reduced stockpiling, weaker refinery margins
2016: Continued Strength - High OPEC oil production - Continued low oil prices - More crude moving from Atlantic to Pacific
- But… fleet growth increases to 4%
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Still Upside to Asset Prices Analysis suggests secondhand prices should be ~5-10% higher
40
50
60
70
80
90
100
110
15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 55.0 60.0
5yr P
rice
($m
)
1yr TC Rate ($’000 / day)
VLCC TC Rates vs. 5yr Price
40
60
80
100
120
140
160
180
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$ m
illio
n
Source: Clarksons
VLCC NB vs. 5 yr Asset Values
VLCC 5 yr Old VLCC NB
Today
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