The stars are aligning for a tanker supercycle, writes analyst company Shipping Strategy Ltd. Due to weak markets, low returns, changes to regulations and the pandemic, tanker owners have not been ordering many ships for several years. Nor are they likely to do so now with newbuilding prices near historical peaks, regulatory uncertainty growing, and the long-term prospects for oil demand rather downbeat due to the energy transition.
Thus the oil tanker fleet is barely growing even without mandatory scrapping of ships as they reach 25 years of age. Net fleet growth until at least 2026 is virtually zero.
Meanwhile the disruption caused by the war in Ukraine, with Russian oil going east on a so-called dark fleet, threatens to become an indefinite change in trade patterns – one which reduces efficient use of the ‘legitimate’ fleet of crude oil carrying vessels.
As the global economy comes out of the pandemic and oil demand recovers to numbers closer to their pre-pandemic levels, the amount of oil on the water in Q1 this year exceeds the volume at any time in the previous six years.
Earnings on crude oil tankers are higher than they have been since the 2005-08 boom, concludes Shipping Strategy – and this time there is no wave of newbuilidings coming to undermine the market.