In this list
Coal | LNG | Oil | Petrochemicals | Shipping

INTERVIEW: International Seaways CEO sees two-speed tanker recovery

Energy | Energy Transition | Emissions | Oil | Refined Products | Jet Fuel

Asian jet fuel market takes off after a long hiatus; airlines eye sustainable fuels

Energy | Oil | Crude Oil

Platts Crude Oil Marketwire

Metals | Coronavirus | Steel

16th Steel Markets Asia Conference

Energy | Oil | Natural Gas | Crude Oil | Refined Products

Crude oil prices retract as omicron variant renews demand concerns

Energy | Oil

Fuel for Thought: OPEC+ to set tone for 2022 with response to US oil release, COVID-19 variant

INTERVIEW: International Seaways CEO sees two-speed tanker recovery


Vaccine rollout shortfall in emerging market oil demand hubs: CEO

Platts-assessed freight rates on key US-China route lowest since 2018

Recovery expected in 2022 after 'hangover from the party': Zabrocky

Future fuel uncertainty prompting new build caution: CEO

Short-term demand recovery for the tanker market will rely on buying appetite for oil in emerging economies and on their successful vaccine rollouts, International Seaways CEO Lois Zabrocky told S&P Global Platts.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Developed countries are further ahead with providing their populations with coronavirus vaccines, the tanker firm CEO said, pointing to a two-speed shipping sector in which key oil demand hubs for the tanker market in Asia and the Middle East are lagging behind.

"Where we need the vaccines, from the tanker worker perspective, is in emerging markets. That is where you have the highest growth, and where you have the most energy demand intensive needs," she said in an interview in September.

That puts the spotlight on China, India, Indonesia and other regions such as the Middle East and South America. "These are the countries where our demand comes from," Zabrocky said.

For now, Asian demand leaves room for improvement, analysts at S&P Global Platts said Sept. 2 in their Tanker Freight Rate Market Forecast.

Weaker fundamentals in Asia are leading a low contribution from East of Suez to global demand growth in the third quarter, they said. In the fourth quarter, demand growth in Asia is expected to be much stronger, although Middle East demand is subject to seasonal declines, they said.

VLCC activity has remained stable across all major routes again in August, highlighting the fact that 2021 has so far seen the lowest rates since at least 2010, S&P Global Platts Analytics said.

Weak market environment

Freight for the benchmark 270,000 mt VLCC USGC-China route, which gauges the freight rate performance for longer-haul voyages to Asian destinations, currently sits at a lump sum of $4.15 million, and has not pushed above $4.2 million since May 31. The cost of taking a VLCC on the voyage even slipped to $3.9 million on Aug. 19, the first time it was assessed at that same rate since April 30, 2018. Freight for the route has never fallen below that level since Platts began assessing the run in March 2018.

August freight levels have been low for the benchmark voyage in comparison to previous years, averaging 16.9% and 36.2% lower than the average rate for that month in 2020 and 2019, respectively.

Shipping market participants are pointing to a severely over-tonnaged VLCC market that is putting a dampener on rates even as oil demand slowly returns.

For now, the oil market is working down inventories and Brent and WTI forward curves are in backwardation, following a period of high demand in 2020 when market players scrambled for floating storage capacity.

"I call this the hangover from the party," Zabrocky said.

International Seaways expects a return of global tanker demand come 2022, looking towards improved vaccine roll-outs and the return of 2 million b/d of OPEC+ supply from August to December, the company said in its second-quarter earnings report.

Future fuel hiatus

International Seaways, in partnership with Shell, ordered three dual-fuel LNG VLCCs for delivery in 2023, Zabrocky said March 12.

This comes amid what she described at the time as the reluctance of shipowners to engage in newbuilds due to uncertainty about future fuel and propulsion technology and environmental regulations.

Dual-fuel LNG engines, which offer high speed and lower methane slippage, are the most efficient ship engines available today, Zabrocky said in the interview this month.

LNG is widely touted as a suitable fuel for vessels to meet International Maritime Organization-mandated targets for 2030, which stipulate a 40% reduction in CO2 intensity in the global fleet by that date, compared with 2008 levels.

Taking the clean tanker segment, owners are investing in vessels that will run on methanol, LNG, and in a few cases on battery propulsion, analysts at Platts Analytics said. "Our base case 2030 fleet model forecasts that 440 LNG dual-fuel vessel are delivered compared with 79 methanol-fueled vessels along with a handful of other alternative fuels," the analysts said.

However, detractors note that while it may have value as an interim fuel, it may be difficult to deploy it as a suitable fuel to meet the IMO's 2050 goals, which target a 50% reduction in greenhouse gas emissions from the global fleet. This has implications for methane use and subsequently for LNG.