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The global oil tanker industry will have to endure another year of low profits on the back of pandemic-related disruptions and production constraints, the chief shipping analyst of industry association BIMCO said.
"We need to look towards another 12 months of fairly low earnings," Peter Sand said at the annual Platts APPEC conference as quoted by Reuters.
"Most likely, in the loss-making region, meaning that VLCC will make less than $25,000 a day on average for the next year or so," he added.
The average daily earnings of Very Large Crude Carriers currently stand at around $10,000. That's down from a record-high of $240,000 last year when the destruction of oil demand by the coronavirus pandemic spurred strong demand for tankers as floating storage.
As the pandemic began to be put under control and demand for oil began to recover, the demand for floating storage also shrunk, as did daily earnings rates. In the first half of 2021, these rates fell to the lowest in 20 years due to these developments.
"This extreme weakness has certainly given the tanker market some hope to be optimistic that the worst is now behind us," said shipbroker Gibson in July. "The industry is now much better positioned than at the start of the year, given the successful rollout of vaccines across the developed world and the demand recovery that accompanied it, although rates still remain abysmal."
Sand noted that fuel tankers are doing better than crude oil tankers, except those transporting jet fuel, because jet fuel demand was still in decline—even lower now than it was in the first half of last year.
Interestingly enough, despite the dire straits of tanker owners, more vessels are joining the fleet. BIMCO earlier this month said that it expected the global crude oil tanker fleet to rise by 2.7 percent or 12.8 million deadweight tons in net additions. Oil product tanker numbers will rise by 1.7 percent or 3 million deadweight tons.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com