The Biggest Loser Of The OPEC Deal

11 Jan 2018   OPEC

OPEC’s oil production and supply cuts—now in their second year—have claimed a victim. It’s an industry that’s 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 […]

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