The predicted influx of new tonnage, combined with the Organisation of the Petroleum Exporting Countries’ (OPEC) production cap and lower levels of refinery throughput are hitting hard on the crude tanker vessel market.
Latest report by Maritime Strategies International (MSI), said the crude tanker market is set to go through a testing time over the next six months, and perhaps longer, if OPEC is successful in extending production cuts beyond the first half of 2017.
OPEC is expected to hold its 172nd ordinary meeting in Vienna, Austria on May 25th. Experts believe that the oil cartel could extend its oil output cuts to the end of 2017, if other producers continued to play ball.
According to MSI the Very Large Crude Carriers (VLCC) and Suezmax markets moved downwards in January, with spot rates sliding rapidly from a seasonally strong December.
It stated that pressure has persisted in these sectors in February, leaving the crude tanker spot market under increasing strain.
MSI Senior Analyst, Tim Smith, said: “OPEC is one clear culprit behind the downturn, with compliance to committed cuts estimated at close to 90% so far in January, another is the huge amount of refinery maintenance scheduled to occur in the near-term.”