The tanker market has been in a constant state of flux, with cargoes destined to derive from various locations, not so active in the past and vice versa. In its latest weekly report, shipbroker Xclusiv Shipbrokers said that “oil markets were very busy during the previous week. Oil prices have been rising to levels not seen since November due to expectations of tight supplies. WTI crude futures rebounded to over USD 87/barrel, when back on 24th August 2023, the price was about USD 78 and Brent crude futures are at USD 90.8/barrel, about 10% higher than 24th of August. Saudi Arabia announced it will extend its voluntary output cut of 1 million barrels per day through the end of December. Russia also extended its voluntary reduction in oil exports by 300,000 bpd until the end of the year”.
According to Xclusiv, “Russia’s and Saudi Arabia’s decision did not only trigger a boost of oil demand and price spikes, but it also triggered various actions around the market. Iran, Iraq and Nigeria have already increased their crude oil production, to offset the further production reductions that were announced by Russia and Saudi Arabia. In August 2023, OPEC+ crude oil output grew by 120,000 barrels/day with the help of the three foretold countries. According to markets data, Iranian production of 2.95 million b/d is the highest since November 2018, production in Iraq grew 110,000 barrels/day as internal consumption increased, while Nigerian output was up 60,000 barrels/day, as loading resumed at the Forcados terminal, after an underwater leak disrupted loading for a month”.
“Many economists however predict that 2023 will be the last year of crude oil demand recovery from COVID-19 for China and from 2024 onward the rate of oil demand growth will start to slow down. China, disturbed by oil production cuts, is trying to cover its back by making additional agreements to ensure sufficient quantities for its refineries. So, there is a new round of negotiations between the state-owned Saudi Aramco and its Chinese customers for 2024, which will help the world’s largest exporter of oil to compete for China’s “top crude supplier” against Russia”, the shipbroker said.
Meanwhile, Xclusiv added that “rumors say that Saudi Arabia is set to increase crude supplies to China in 2024 for the new refineries, despite the decision to extend its production cut until end-2023. Also, the independent oil refineries in China also started to turn towards Iranian crude and most of them are now importing their feedstock requirements from sanctioned-hit Russia, Iran and Venezuela. The replacement of non-sanctioned crude oil with cargoes from sanctioned countries in most of China’s independent refineries has played a vital role in freeing up non sanctioned volumes to the market and is helping keep a lid on world crude oil prices”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide