Product Tanker Surge Shows No Signs Of Slowing

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Niklas Bengtsson and Christopher Pålsson of maritime-insight discussed the product tanker market at the recent International Chemical & Product Tanker Conference, reports Riviera.

Product tanker market

Speaking at this year’s Tanker Shipping & Trade Chemical & Product Tanker Conference in London in April 2023, maritime-insight directors Niklas Bengtsson and Christopher Pålsson presented their analysis of the product tanker market.

“In the past 30 years, about two and a half billion people have been added to the world population,” said Mr Pålsson. “At the same time, world GDP has more than doubled. China’s GDP has increased 16-fold in the same period of time and world seaborne trade has more than doubled,” he said, during a macro view of product tanker demand.

Mr Bengtsson noted that 83% of global energy usage is carbon driven, and more than 30% is derived from oil. Looking at a base-case scenario, a reduction of 17M b/d would be an approximately 17% reduction in current demand, but would overshoot the greenhouse gas (GHG) target. Meeting the target implies a reduction of the three-quarters of demand. “Either way, tanker shipping as we know it today will not be the same,” said Mr Bengtsson.

An additional of two billion people requires “a huge increase in infrastructure, which requires energy, which requires food, which requires more fertiliser and more energy,” they noted.


According to maritime-insight, crude oil demand growth from 2023 to 2027 will be 1% yearly and will then start to fade away. On the supply side, maritime-insight notes: “In the next five years, we do not really see a demand for a lot of removals.”

“After that,” said Mr Pålsson, “more or less in all sectors in the merchant fleet we will see quite a lot of removals, not the least because of CII and other environmental rules that are coming on stream. And this will give another problem to the world of shipping.”

That problem is the decline in refinery capacity in Europe and the growth of refinery capacity in the Middle East and China. Much of this capacity increase and diversification was predicated on stable, low freight rates, which have been eradicated following Russia’s invasion of Ukraine. The unstable, volatile freight environment is a boon for the product tanker sector.

What does maritime-insight see as the future for the product tanker sector? “Oil product demand has not yet peaked. And it could be several years into the future before we reach the peak,” noted Mr Pålsson. He also noted that despite the sharp increase in newbuilding ordering since the start of 2023, it is from a low base. “The product tanker fleet is not yet over-ordered, despite the high earnings,” he said. “In the shorter term, we have a very robust demand. We have a modest fleet growth, all of which paves the way for a near term that looks good to us.”

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Source: Riviera


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