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Tanker market to take 2-3 months to recalibrate following Ukraine invasion: executive

Home-Shipping-News-International-Shipping-News-Tanker-market-to-take-23-months-10665.jpg      The oil tanker industry will see a return to higher activity and longer average distances once the sector reorganizes trade routes as a result of Russia’s invasion of Ukraine but greater clarity will take at least two months, the CEO of tanker firm Euronav said March 29.


The oil tanker industry will see a return to higher activity and longer average distances once the sector reorganizes trade routes as a result of Russia’s invasion of Ukraine but greater clarity will take at least two months, the CEO of tanker firm Euronav said March 29.

Russia’s crude oil exports typically amount to about 4.6 million b/d with 2.5 million-2.8 million b/d heading to Europe, 1.5 million b/d to Asia, and 210,000 b/d to the US, according to analysts at S&P Global Commodity Insights.
Of this, about 750,000 b/d goes via pipeline to Europe and 600,000 b/d via pipeline to China, leaving around 3.2 million b/d to travel by sea.

Not all of these barrels are under sanction but the market currently need to replace around 2.6 million b/d of Russian exports, which have been displaced mostly by boycotts over Moscow’s war in Ukraine, Euronav CEO Hugo De Stoop said in a key note speech at the S&P Global Commodity Insights Oil & Energy Storage Conference.

“It is just [a question of] rearranging the logistics and knowing that a voyage to the Far East is something like 50-60 days. It will probably take two-three months for the logistics to be put in place,” De Stoop said.

Russia invaded Ukraine Feb. 24 and since then the US, Canada and the UK have announced curbs on Russian energy imports. More extensively, a number of companies from different countries are avoiding dealing with Russian counterparties and this is causing previous importers of Russian oil to look elsewhere.

The likelihood is of longer average tanker distances, which should absorb some of the extra tonnage in the market, De Stoop said.

An increase in short-haul trades, incentivized by Brent’s steep backwardation, had also seen a decrease in ton-mile demand and created a tanker supply surplus in most loading areas prior to the Russia-Ukraine war, according to market watchers.

Tanker rates are now returning to Q4 2021 levels, which companies described as a weak period.
S&P Global assessed the dirty USGC-China VLCC route at $19.81/mt March 28, after spiking at $25.93/mt at the end of February. Prior to the invasion, Platts had assessed it at an average of $18.34/mt since the start of 2022, down from $19.39 in Q4 2021.

Source: www.spglobal.com

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