The Biggest Loser Of The OPEC Deal

OPECs oil production and supply cutsnow in their second yearhave claimed a victim. Its an industry thats vital for the crude oil exports of oil-producing countries: supertanker shipping.

The supertankers, or very large crude carriers (VLCCs), are vessels capable of carrying around two million barrels of oil. As OPEC and its non-OPEC allies work to remove a combined 1.8 million bpd off the market to draw down the global glut, the number of supertankers voyaging from the Middle East to Asia, for example, has dropped.

This decreased demand coincides with a period of new-build vessels being delivered and adding to the global supertanker fleet, thus creating an excess supply of supertankers at a time when crude oil trade out of the Middle East is down. Moreover, the oil futures market is currently in backwardation (the situation in which front-month prices are higher than those for months further in the future), which makes hoarding oil in supertankers at sea uneconomical and frees more vessels, adding to the overcapacity of the global fleet.

All these factors led to a slump in supertanker average daily earnings in 2017, to their lowest since 2009 and to below initial analyst expectations.

According to Clarkson Research, the average VLCCs earnings dropped to $17,794 per day in 2017, from $41,888 in 2016, a 57.5-percent slump. The average 2017 earnings were the lowest since at least 2009, according to Clarkson data cited by Bloomberg.  

Just before the OPEC/non-OPEC production cuts bega....

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