Saudi Arabia's Energy Minister said on Wednesday that OPEC+ will ease its production cuts next month as planned. The group will reduce its cuts from 9.6mbpd currently in place to 7.7mbpd in August. However, it is unlikely to have any material impact on tanker earnings.
Firstly, the rise in supply is expected to be smaller than the headline figures suggest. Some of the members that didn't fulfil their commitments in May and June, such as Iraq and Nigeria, are required to make extra compensatory cuts. The net increase in production is estimated to be in the region of 1-1.5mbpd as a result.
Secondly, most of the incremental volumes will be absorbed domestically by the producing countries as demand is recovering. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman said that his country’s exports won’t change next month. Saudi Arabia accounted for 34% of OPEC’s shipments during the first half of this year.
And finally, active tonnage supply is on the rise. Over 10% of the crude oil fleet is still tied up in floating storage; that is now unwinding and ships are redelivering.
With a marginal or no increase in exports and a growing active fleet, crude oil tanker earnings are unlikely to improve materially in the near term.
Source:Arrow
The opinions expressed herein are the author's and not necessarily those of The Xinde Marine News.
Please Contact Us at：
media@xindemarine.com
.gif)
