2024.10.10

[SLOW] EIA - Crude Oil Outlook _ World oil supply & demand outlook

Rising VLCC rates amid oil supply adjustments

Recent adjustments to oil production forecasts are positively influencing the outlook for VLCCs. The US EIA and the IEA have projected an oversupply in the oil market, estimating a 200,000 barrel per day excess. This oversupply is expected to lead to lower oil prices, which, in turn, supports long-haul freight for tankers. Despite ongoing challenges, including a month-long production shutdown in Libya and disruptions from the US hurricane season, VLCC rates have been on the rise.

From late August to early October, VLCC rates climbed significantly, reaching approximately $41,226 per day, signaling a recovery from a summer downturn. Analysts anticipate that VLCC rates could enter the six-figure range—levels not seen since spring 2020—due to a shift in OPEC's production strategy. The current market dynamics, including tensions in the Middle East, are expected to keep demand robust for VLCCs, with more vessels set to be deployed, further boosting rates.

[SLOW] Daily VLCC Market _ VLCC TCE comparison by routes

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[SLOW] Weekly Clean Tanker Research _ Clean MR secondhand price by ship ages

Bahri expands fleet with $96 million purchase of two IMC product tankers

Saudi shipping giant Bahri has reportedly acquired two Chinese-built MR2 product tankers, the Maritime Inspiration and Maritime Verity, from Singapore-based IMC Shipping for a total of $96 million. These vessels, built in 2021, are each valued at approximately $57.2 million, although determining their exact worth is challenging due to the lack of comparable sales this year. Bahri has been highly active in the maritime market, spending about $1.6 billion on various vessels, including 13 VLCCs and a multipurpose heavylift ship. Meanwhile, IMC has shifted to an asset-lite model, although its tanker arm, Aurora Tankers, still maintains a fleet of around 20 product tankers. Neither Bahri nor IMC has commented on the reported transaction.

[SLOW] https://slowspace.io/  Folder Filters _ Bahri

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[SLOW] https://slowspace.io/  Flow Restriction _ Sanctioned

The impact of the shadow fleet on maritime compliance and safety

The rise of a "shadow fleet" of tankers serving sanctioned nations like Russia, Iran, and Venezuela is increasing operational costs and stress for ship management companies. Executives from firms like V.Group and Synergy Marine Group reported losing tankers that were sold to entities failing compliance checks, highlighting a growing challenge in maintaining safety and regulatory standards. Companies are investing in advanced technology and specialized expertise to navigate the complexities introduced by this fleet. Compliance teams are being strengthened, and ship managers are implementing stringent vetting processes for new clients. Despite these efforts, the shadow fleet creates market distortions, leading to higher costs and potential safety hazards for compliant companies.

[SLOW] OFAC Sanction Tanker List _ VLCC

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[SLOW] www.slowspace.io _ Tengiz oil field and pipeline

Record output at Kazakhstan’s Tengiz oil field sparks concerns over OPEC+ quota compliance

Kazakhstan's Tengiz oil field, operated by Chevron, hit a record output of 699,000 barrels per day (bpd) in October, up from 687,000 bpd in September. This increase may complicate Kazakhstan's compliance with its OPEC+ quota, which it exceeded in September by around 170,000 bpd. OPEC+ has previously identified Kazakhstan, Iraq, and Russia as countries failing to meet their production curbs. While Kazakhstan may meet its October quota due to the maintenance shutdown of the Kashagan field, concerns arise about future compliance when Tengiz resumes expanded output. Chevron and partners plan to further expand Tengiz's capacity to 850,000 bpd by 2025, at a cost of $49 billion.

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[SLOW] https://slowspace.io/ Trade Flow Russian seaborne crude exports by origin ports

Russia increases idle refining capacity by 67%, boosting crude oil exports

Russia is set to idle 4.0 million metric tons of oil refining capacity in October, a 67% increase from earlier plans, which will boost crude oil exports. This follows a rise in idled capacity in September, and several refinery shutdowns, including Rosneft's Black Sea plant. As a result, oil exports from Russia’s western ports are expected to increase by 5%. Russia has faced pressure from OPEC+ to adhere to production quotas, though it has exceeded them, promising compensation during 2024-2025. Cumulative idle refining capacity for the year has risen to 36.7 million tons, compared to 30.9 million tons in 2023.

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[SLOW] https://slowspace.io/ _ Angola quit OPEC in 2023 over disagreement on oil production quotas

Equinor welcomes Angola’s policies for reviving oil production

Equinor ASA has welcomed Angola’s updated oil policies aimed at preventing a decline in production. The country has introduced incentives to boost output from existing developments, a move described by Equinor’s senior vice president, Nina Birgitte Koch, as “very positive” and rare in the industry. Angola has been grappling with years of declining oil production due to underinvestment but is aiming to maintain output above 1 million barrels per day. Equinor produces around 110,000 barrels a day in Angola, its largest share of output in Africa, and is also pursuing gas projects in Algeria and liquefied natural gas development in Tanzania, although progress has been slow.

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[SLOW] Oil Market _ North Sea Oil Price

Libyan oil export surge pressures European crude prices

The resurgence of Libyan oil exports is pressuring crude prices across Europe, particularly in the North Sea and Mediterranean regions. Mediterranean refiners are reducing purchases of oil from outside the area, causing price differentials for many grades to drop by over $1 per barrel in recent weeks. Libya's oil production has doubled since a September agreement between rival governments, boosting exports and driving up freight rates as refiners rush to secure tankers. This increase in local supply is leading refiners to favor nearby sources, further lowering the prices of sweet crudes like Azeri Light and Caspian CPC Blend, and reducing demand for Nigerian oil.

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European diesel margins decline amid rising imports and US inventory drop

Diesel profit margins in Northwest Europe fell for a third consecutive session to $16.11 per barrel due to increased import expectations. However, a sharp drop in U.S. distillate inventories, which include diesel and heating oil, limited the losses. U.S. stockpiles fell by 3.1 million barrels last week, exceeding forecasts. Europe has already received 5.69 million metric tons of global diesel deliveries in October, surpassing September's arrivals, and imports are expected to rise further to meet winter demand. Additionally, Oil Brokerage announced its acquisition of Blue Commodities to strengthen its physical fuel market presence.

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North Dakota wildfires reduce oil output by up to 100,000 barrels per day

North Dakota's oil production has decreased by an estimated 70,000 to 100,000 barrels per day due to ongoing wildfires. Since October 6, the state has faced six wildfires, resulting in two fatalities. The wildfires have also impacted natural gas production, reducing output by 0.21 to 0.30 billion cubic feet per day, according to the North Dakota Pipeline Authority.