Daily rates for smaller oil tankers have started to recover after OPEC+ and Saudi Arabia announced they would gradually add around 2 million barrels per day (bpd) of crude production on the market between May and July.
Tanker owners anticipate a more lucrative second quarter compared to the lowest rates in over a decade seen in Q1, Lloyd’s List reports. Yet, the industry expects still expects difficulties in the coming months, especially in the supertanker segment.
In the first quarter, tanker rates were impacted by the massive production cuts from OPEC+ and the extra 1 million bpd cut from OPEC’s top producer and the world’s top crude oil exporter, Saudi Arabia.
The cuts from the OPEC+ group were already hurting the oil tanker market at the start of this year amid reduced availability of seaborne shipments from Saudi Arabia and a rising number of oil tankers available on the market after months of serving as floating storage.
Oil tanker owners and shipbrokers continued to suffer in March and were bracing for low rates for longer than expected after the OPEC+ alliance surprised the oil and tanker markets by deciding to keep oil production flat in April.
Related Video: Iran’s Oil Exports Render Sanctions Irrelevant
Now that OPEC+ has decided to put more crude on the market between May and July, tanker rates for smaller vessels are rebounding. However, some of the larger tankers continue to see negative freight earnings, according to Lloyd’s List.
As per Lloyd’s List Intelligence data, exports from the Middle East slumped by 9 percent in the first quarter of 2021 compared to the same period of 2020. Exports dropped to 17.6 million bpd from 19.3 million bpd for Q1 2020. The exports in Q1 2021 were at their lowest level since 2010, according to Lloyd’s List Intelligence data.
Tanker firms see better times ahead, compared to earlier this year. Nordic American Tankers Ltd, for example, said this week in comments on the opening of the Suez Canal that “Long before the Suez Canal was closed, we saw a strong increase in rates for our Suezmax tankers which can load one million barrels.”
“There is a strong drive in the market, indicating an improvement in the time to come,” said Herbjorn Hansson, founder, chairman, and CEO of Nordic American Tankers Ltd.