Tanker Market Won’t Benefit from OPEC’s Latest Decision
he tanker market didn’t receive any positive news from yesterday’s OPEC decision to stick with its planned output increase of 400,000 b/d for March, despite rising market uncertainties stemming from the latest geopolitical tensions.
In its latest weekly report, shipbroker Intermodal said that “oil prices have rallied to the highest level since October 2014 breaking above $90/bbl recently. November 2014 was the point when OPEC unleashed production to take advantage of elevated prices, indirectly initiating a price war with U.S. shale producers and in sequence, putting oil prices into a long bear market. The pandemic brought another shock to the energy complex sending Brent prices to the lowest level since late ‘90s with WTI turning negative. The shock shifted the forward curve into a contango structure benefitting traders and increasing demand for floating storage sharply with tankers enjoying an unprecedented freight rally in Q2 2020. Last year, however, the tide turned, with crude prices rising by more than 50%. The rally carries into 2022 leading to rising oil equities as well”.