The US is ramping up oil production with much of the exports bound for Asia, something that will see tonne-mile demand improve for the hard pressed VLCC sector, according to new analysis from tanker broker Poten & Partners, reports Splash 247.
The hike in crude production
In its most recent short-term energy outlook, the US Energy Information Administration forecasts that US crude oil production will rise to an average of 12m barrels per day in 2022 and 12.6m barrels per day in 2023, which would be a record on a yearly average basis.
The average 2022 production would represent an increase of 800,000 barrels per day over the 11.2m barrels per day average US output of 2021, an increase of 7%. Major producers like ExxonMobil and Chevron have announced in their recent quarterly earnings calls that they will boost production by 25% and 10% respectively.
US crude exports to Asia have been increasing dramatically in recent years – from 538,000 barrels per day in 2017 to 2.7m barrels per day last year. Last year, 50% of all US crude oil export cargoes were sold into Asia.
“If a similar percentage of the additional 1.4 mb/d expected for 2022 and 2023 will also be transported to Asia, it will mean a major boost for VLCC ton-mile demand,” Poten suggested in its latest weekly report.
To put this in perspective, an increase in exports of 700,000 barrels per day from the US to Asia would require an additional 35 VLCCs, assuming ballast-back voyages. The same volume coming from the Middle East would require only 10 to 12 VLCCs.
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Source: Splash 247