India’s growing demand for oil and its plans to become less dependent on crude from the largest supply sector, the Middle East, are poised to support the demand for oil tankers traveling on routes further afield. third largest oil importer in the world.
India, which accounts for more than 80 per cent of the crude oil it consumes, has noted in recent years that it needs to look beyond traditional suppliers. the Middle East for oil. Given the country’s fortunes at the proximity of some of the world’s largest oil exports, India is now looking to boost energy security by getting more options when it comes to oil suppliers. It is also looking to pay less for oil from outside the Arabian Gulf, arbitrage and price spreads allow.
India’s diversification campaign has intensified this year. The recent oil price rally and OPEC + ‘s decision to keep markets tight through April has angered the world’ s third largest oil importer as its import costs have risen. going up and domestic fuel prices going higher.
India’s more aggressive plans to diversify oil purchases away from the Middle East are likely to support the global oil tanker market, both in the short and long term, analysts and analysts say. -break of vessels says.
With Indian crude oil demand set to grow in the future, which is likely to become a major driver of global growth, India’s imports will increase, and the demand for thousands more. tankers they would generate.
Oil Tanker Market From Boom to Bust
The tanker market, for its part, went from boom to momentum in the year since the outbreak began.
At this time last year, tanker levels were soaring as the world’s largest oil exporter, Saudi Arabia, vowed to put oil on the market with oil when he soon broke up his OPEC + agreement with Russia. The Saudis rushed to retain supertankers, in addition to their own fleet, to send large quantities of crude oil to the brightest market, the United States, and the traditional destinations in Asia.
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The fall in oil prices and futures demand curved to a deep contango, with market conditions marking a call and giving up the act of storing oil for profitable future sales. This created an additional tanker run from traders and oil majors trading arms who were looking to use hire vessels as floating storage.
In just a week in March 2020, daily rates for large crude carriers (VLCCs) rose from the low $ 30,000s before the Saudi-Russian broke up to $ 200,000- $ 300,000 per day, which depending on the destination of the oil cargo.
One year later, in March 2021, VLCCs are losing money on some routes, Clarksons Research estimates, as reported by The Wall Street Journal.
And it’s not just the OPEC + cuts and the additional Saudi cut that are limiting the availability of crude for shipping. It is also a tanker device on the market after most vessels used for floating storage re-entered the tanker fleet to dispense oil. The tight oil market and the prospect of accelerating global oil demand in the second half of the year have removed the incentive for oil traders to store for future sales as the market slows down. at present, skid prices are higher than those farther out in time.
OPEC + ‘s surprise decision not to boost production next month is putting extra pressure on the tanker market, with oil tanker owners and shipwreckers set to suffer longer than expected. from the OPEC + production cuts. Related: The only recovery method of using billions of barrels could loosen in Alaska
Ultimately, this oil tanker market downturn is unlikely to last long – at some point, OPEC + will ease the cuts. In the meantime, the tanker market is likely to benefit from India’s plans to import more crude oil from further afield than its next-door neighbors in the Middle East.
Indian variety “Music to the ears of tanker owners”
Following OPEC + ‘s decision to introduce the cuts in April, India is urging its state brewers to look strongly at diversification of imports away from the Middle East, as they are unhappy with the tighter oil market and higher oil prices.
India is estimated to have seen a sharp rise in crude oil imports from the United States in February, while halting purchases from Saudi Arabia to the American level overtaking the Saudis as the second largest. largest oil supplier in India. The Indian state reshuffle is reportedly facing more supply cuts from Saudi Arabia in the coming months, sources familiar with the plans told Reuters this week.
India’s effort could diversify away from the Middle East with more oil purchases from Russia, Venezuela (US sanctions relief allowed), and perhaps the world’s newest oil producer, Guyana, “Some supplies were sent out from two of the country’s largest conventional suppliers, Iraq and Saudi Arabia, which would ultimately support a thousand-tonne demand,” Gibson Shipbrokers said in a report this week. went.
“The combination of growing demand and shrinking capacity reflects growing trade flows for the country both in the short and medium term, and at the same time will not lead to an initiative. the government multiplied imports but increased more tonnes, ”said Gibson Shipbrokers.
Tanker owners have been more closely following China’s oil demand as it is the single biggest driver of global demand and because China is the longest route from the Arabian Gulf, compared to to Gulf-India shipments, more supportive of ton-mile demand for tankers, shipping market information company Poten & Partners says.
“A raw barrel going from the Gulf of Arabian to India generates much less demand of thousands of tons than the one barrel going to China,” Poten & Partners said in a report this week. went, saying:
“That is why the recent reports that India intends to reduce its reliance on OPEC in the Middle East and to buy more crude oil from suppliers in the Atlantic Ocean than India. music to the ears of the owners of the tanker. ”
By Tsvetana Paraskova for Oilprice.com
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