In the third of our four part shipping market outlook series we are focusing on the outlook for the tanker sector in the second half of 2023 with Maritime Strategies International (MSI) analyst Tim Smith.
You can listen to the full interview as a podcast in the player above
Is volatility set to continue in the second half of 2023?
Smith tells the Seatrade Maritime Podcast that volatility is normal for the tanker market but that perhaps we have seen more of it than usual. “That volatility usually stems from uncertainty and disruption, and that those are two things that the tanker market seen in spades,” he says.
Russia’s invasion of the Ukraine has continued to impact the market but there have also been major policy shifts in other parts of the world. Post-Covid Chinese demand oil demand has bounced back. “China’s really come back in terms of a driver for oil demand. It’s normalised in that regard,” Smith says. Meanwhile OPEC+ led by Saudi Arabia has had a series of rolling cuts in terms of production.
“We will probably see volatility continue,” he comments.
How much of a factor will sanctions continue to play in the market and tradeflows?
“The oil trade map has been changed and disrupted, and that’s driven a lot of the upside for the tanker sector that is going to stay in place unless we see some radical shift in geopolitical conditions, which we don’t expect,” Smith explains.
Demand and supply – will we see more newbuilding orders in the coming months?
“Last year was a real low point in terms of contracting, so, we don’t have a big orderbook. In fact, we have the opposite it’s a very low order book, which means to some degree, the market has a has an amount of protection from the supply side if you like going forward,” Smith explains.
“We expect the contracting side to pick up because we although we see some moderation earnings, we still think tank earnings are going to be relatively solid going forward. So we expect some of that to translate into more faith in terms of the longer term outlook for the sector.”
Listen to the full interview in the app of your choice below