By Julianne Geiger of OilPrice.com
Demand for oil tankers carrying oil products is set to soar next year to heights not seen in three decades, according to new research from Clarkson Research Services, Ltd., cited by Bloomberg.
The research organization is forecasting that the number of ton-miles will increase next year by 9.5%–the largest annual increase since 1993.
Ton miles—the volume of cargo multiplied by the distance that cargo traverses—is a common gauge that the shipping industry uses.
Part of the reason behind the anticipated demand surge for ton miles for oil products is the change in routes due to Russia’s soon-to-be restrictions on exports. Russia will need to redirect crude product flows to buyers not involved in price capping or sanctions, such as Asia—but this rerouting is expected to increase the distance that Russian cargos are shipping.
“It could easily be five or six times the distance and that means that you’ll need much more ships to transport the same volume that you imported previously,” said Anders Redigh Karlsen, an analyst at Kepler Cheuvreux, told Bloomberg.
“That is going to drive demand for product tankers.”
In September, Danish shipping company Torm told Bloomberg that “The EU ban on Russian oil products from February 2023 will spark a recalibration of the oil trade ecosystem. Some of this trade recalibration has already started.”
Another factor are new refineries in Asia and the Middle East, which are expected to begin to exporting.
The oil tanker market is already having a good year earnings-wise, as rates for carrying refined fuels on medium-range voyages increase to levels not seen since 2008.
Demand for tankers has been on the rise ever since the EU sanctioned Russia, and shipping companies were left scrambling to get ahold of ice-class tankers ahead of the embargo. Few tankers have been built in the past few years, and since this is not something the industry can reverse overnight, supply will probably remain tight, pushing the cost of transporting oil and fuels higher.