• 1 day PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 1 day Syrian Rebels Relinquish Control Of Major Gas Field
  • 2 days Schlumberger Warns Of Moderating Investment In North America
  • 2 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 2 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 2 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 2 days New Video Game Targets Oil Infrastructure
  • 2 days Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 3 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 3 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 3 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 3 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 3 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 4 days Conflicting News Spurs Doubt On Aramco IPO
  • 4 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 5 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 5 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 5 days China To Take 5% Of Rosneft’s Output In New Deal
  • 5 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 5 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 5 days VW Fails To Secure Critical Commodity For EVs
  • 5 days Enbridge Pipeline Expansion Finally Approved
  • 5 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 5 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 6 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 6 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 6 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 6 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 6 days Aramco Says No Plans To Shelve IPO
The Approaching U.S. Energy-Economic Crisis

The Approaching U.S. Energy-Economic Crisis

The connection between energy and…

Chinese EV Boom Could Crash Oil Prices

Chinese EV Boom Could Crash Oil Prices

Most oil majors acknowledge that…

US Shale Boom Causes Oil Tanker Rates to Fall to 16 Year Low

US Shale Boom Causes Oil Tanker Rates to Fall to 16 Year Low

Owners of Suezmax oil tankers, which can transport a million barrels of crude, are struggling to breakeven as a variety of factors work together to lower daily shipping rates to their lowest levels in 16 years.

Euronav Suezmax tanker
Euronav Suezmax tanker (Euronav)

The US shale boom has enabled North America to produce its largest share of domestic energy needs since 1986, with daily production at 7.26 million barrels at the end of June. This means that demand for crude imports has fallen to its lowest level since 1996, according to the Energy Department.

Related article: Oil is the New Gold

Clarkson Plc., a leading shipbroker, has predicted that seaborne imports of crude to the US will fall to 5.4 million barrels a day, an 11% decline.

Frode Moerkedal, an Oslo-based analyst at RS Platou Markets AS, told Bloomberg that “domestic oil is crowding out West African imports. Overall trade has been declining because nobody is picking up the slack from the U.S.”

This is compounded by the fact that in 2008, when daily rates were at an all-time record of $155,000 a day, companies ordered a huge number of Suezmaxes to increase the markets capacity by 40%, just before the global recession began.

Clarkson has said that now a Suezmax charges $10,652 a day, the least since 1997, and 55% lower than breakeven, according to Euronav NV, which claims it requires rates to be $23,600 a day.

Paddy Rogers, the CEO of Euronav explained that the market needed to lose 50-60 tankers from the fleet of 480, in order to reduce the capacity glut and increase rates.

Suezmax owners are hoping that the demand lost from the US will be taken up by China, who this year is expected to import almost as much crude via sea as the US for the first time ever. Unfortunately much of the crude travelling to China from West Africa is done so by very large crude carriers (VLCC) which are cheaper per tonne of cargo. According to Galbraith Ltd., a shipbroker in London, VLCC’s shipped 44% of oil from West Africa last month, up from 38% in 2012.

Related article: Why Deflation will Cause Oil Production to Slow


Tanker making its way down the Suez canal.
Tanker making its way down the Suez canal. (Wikipedia)

Another source of hope for the Suezmax is increased demand from Europe, as the Suezmax is the largest tanker able to navigate the Suez Canal that leads to the Mediterranean.

By. Joao Peixe of Oilprice.com



Join the discussion | Back to homepage

Leave a comment
  • Tom Morgan on July 12 2013 said:
    I wonder if some of these vessels could be repurposed to transport the increasing volume of refined hydrocarbon products exported from the United States.
  • Bill on July 08 2013 said:
    That "tanker" sure looks like a bulker...

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News