The “Nordic Hunter” has travelled a long way since 11 August. Some 277 metres long and 48 metres wide, the tanker departed the Egyptian port of Suez heading for Le Havre. According to the VesselFinder portal, the ship should reach the port situated on the French side of the English Channel on 23 August (after we go to press). It was in the middle of July that the “Nordic Hunter” embarked on its maiden journey in Yeosu, South Korea, where the tanker with a capacity of 2 million barrels of crude oil was built and handed over to Nordic American Tankers (NAT). The US concern immediately leased the newest member of its fleet to the ASYAD Shipping Company. The logistics company owned by the Sultan of Oman will use the “Nordic Hunter” to transport oil from the Middle East for the next six years. The new acquisition is not the only one on the move, though. On the contrary: the world's oceans are positively heaving with tankers. This applies for the Persian Gulf just as much as the Suez Canal, the Straits of Gibraltar, the west coast of Africa and the Gulf of Mexico.
The dense crowd of tankers on these routes can be attributed to the war in Ukraine, which to a certain extent has upset the balance of forces on global energy markets. Western industrialised nations especially are turning their back on supplies from Russia, which had primarily been transported to Europe through pipelines. “Oil will have to be sourced from a myriad of places,” NAT concluded in its report for the first quarter of 2022. The company reckons this is resulting in longer and also more lucrative maritime transports. OPEC, the organisation of petroleum-exporting countries, responded by slowly expanding production, which had been significantly curbed during the coronavirus crisis. This also and particularly applies for the leading OPEC member, Saudi Arabia. According to figures from the US Energy Information Administration (eia), the kingdom has been pumping more than 10 million barrels of oil a day on average for months. Production last crossed this threshold in early 2020 (see graph).
The growing demand for transport capacity is also being reflected in prices. Evidence for this comes from the Baltic Exchange, the London-based specialist in shipping data which calculates the Baltic Exchange Dirty Tanker Index, among others. This is a benchmark for the costs incurred in the transport of crude oil. Information flows into the calculation from a range of market players, such as shipping brokers and owners, operators, dealers and charterers. They provide data on a variety of trading routes, including, for instance, trips commencing in the Middle East, transports from the Black Sea to the Mediterranean, from southeast Asia towards the east coast of Australia, through the North Sea, from west Africa or the US Gulf coast to China. Following the Russian invasion of Ukraine, the Baltic Exchange Dirty Tanker Index has risen to its highest level since autumn 2019 (see chart).
The transport companies can make good use of the increased revenue, given that high energy prices are compelling them to dig deeper into their pockets in order to fuel their fleets – not to mention the investment needed for the expansion of capacities. For tankers of the Suezmax category, which includes the “Nordic Hunter” mentioned above, delivery in five years will cost USDmn 55. Anyone wanting to have such a vessel immediately will have to pay a premium of more than 40%, according to the latest “Compass Maritime Weekly Report”. Even so, it is not exactly easy making such a spontaneous investment. “Major shipyards are reporting they have little or no capacity to build Suezmax tankers before 2026,” NAT reports. In the view of the Americans, this is a very positive sign – for both the long-term outlook for the market and the company itself. Echoing this sentiment, the NAT share has gained almost 60% in value over the course of the year to date, leaving a stumbling Wall Street well behind.
Source: U.S. Energy Information Administration; as at: 22.08.2022 Past performance is not a reliable indicator of future performance.
Source: Reuters; as at: 22.08.2022 Past performance is not a reliable indicator of future performance.
