OPEC's cuts hurt oil-tanker business
OPEC's strategy to end a worldwide crude glut is causing havoc for a vital link in the oil industry's supply chain: the fleet of supertankers that shuttle fuel between continents.
The ships' average earnings plunged last year by more than half to levels not seen since 2009 and far below what shipping analysts had been predicting. Now the producer group's extension of output cuts throughout 2018 is adding to the downturn.
"These cuts reduced the number of cargoes from the Middle East to Asia significantly at a time when a large amount of newly built vessels are being delivered," Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said in a phone interview.
Oil supertankers, known in the industry as very large crude carriers can measure a quarter of a mile in length and haul about 2 million barrels of crude. Since the beginning of 2017, the Organization of the Petroleum Exporting Countries and its allies have sought to reduce oil production by almost 1.8 million barrels a day, curbing exports and business for tankers on key trade routes. The group in June plans to revisit the cuts, which currently run through the end of the year.
Crude exports from OPEC's Persian Gulf members last month dropped below 18 million barrels a day for the first time since August, tanker-tracking data compiled by Bloomberg show. In particular, observed shipments declined to China and Japan from Saudi Arabia, Iran and the United Arab Emirates.
Meanwhile, the global supertanker fleet is....