The swift reintroduction of international travel bans to stem the spread of the Omicron variant of COVID-19 has derailed the already faltering turnaround in rates and earnings for the global tanker market, reports Lloyd’s Register.
Oil demand struggles with global pandemic
In November it looked like a cold winter and rising international air travel in the New Year would lead a long-anticipated recovery. Now, a new coronavirus variant that first emerged in South Africa in the final weeks of 2021 injects fresh doubt.
Eleven of the world’s largest listed tanker companies reported collective losses exceeding $400m over the July-through-September period, after spot rates averaged the lowest in nearly three decades. Total losses for the first nine months of 2021 surpassed $1bn.
The global pandemic shrank demand for oil and refined products – especially transport fuels – curbing crude production and building inventories that reduced seaborne export flows. Spot rates for most of the tanker fleet have been at or below operating expenses for most of the past 15 months.
Plunging oil prices
Earnings for the global fleet of some 15,000 tankers over 10,000 dwt that ship crude, refined products and chemicals gained over November, returning many shipowners briefly into the black during one of the seasonally strongest periods of the year. Rises halted on the Omicron news.
Oil prices plunged 20 percent in one day on fears the latest COVID-19 variant will weaken demand, and by extension, volumes of crude and refined products for shipment.
The silver lining to lower crude costs is that it may trigger further buying from China, benefiting larger tankers. In the last half of 2021, the world’s largest importer slashed shipments and relied on stocks as prices reached seven-year highs. July-through-September crude imports into China were 13.8% down on the prior-year period, Joint Organisation Data Initiative data show.
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Source: Lloyd’s Register
