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Russian Crude and Product Highlights

Feb. 25, 2022

With uncertainty and volatility the main themes in the tanker markets this week, we look at high level numbers for Russia’s crude and product supply and exports in an attempt to quantify a full sanctions scenario.

Current Russian crude oil production stands at 10.9 million b/d divided among large and small producers.  Out of this volume, approximately 5.9 million b/d are consumed domestically in the country’s refining system.  From the remaining balance, JBC Energy data reveals that about 4.6 million b/d are destined for exports, with China responsible for taking about 30 ...

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Project Investment Conundrum

Feb. 18, 2022

The “battle” between charterers and owners is alive and well in today’s projects market, precluding long-term time charter contracts from being executed.  The disconnect between prevailing time charter rates and asset prices has likely never been wider, as asset values have found support from inflationary pressures and tight shipyard capacity, which in-turn have dissuaded owners from divesting out of existing tonnage as replacement costs are high.  In that though, is the conundrum:  asset prices are not reflecting demand/supply dynamics, but owners are unwilling to invest in modern tonnage at these levels because charterers are pricing contracts to reflect ...

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Iran Deal Implications

Feb. 11, 2022

The discussion about Iran and the potential sanctions removal has two main questions.  When will the Iranian barrels return (assuming talks progress further), and what will be the impact in the tanker markets.

To answer the first question, we looked back at the timeline of the Joint Comprehensive Plan of Action (JCPOA) in 2015.  The deal was concluded on July 14, 2015, and the UN Security Council endorsed it on July 20.  Exactly 90 days later, “adoption day” triggered Iran and the other members of the deal to take action to meet their commitments.  It was not until January 16 ...

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OPEC Price Wars: Who Benefits?

Feb. 4, 2022

In trying to determine what can cause a strong tanker market rebound, we looked at past events and under what conditions they occurred, excluding any events that affected only the supply side (e.g., the COSCO sanctions).

The first one was the 2014 price war initiated by Saudi Arabia and Russia against the fast-growing US shale oil producers.  At the time, OPEC producers exceeded their production ceiling almost every month and the US kept adding to its output leading to a market glut, that was exacerbated by a slowdown of China’s economy.  As a result of OPEC and Russia ...

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