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Venezuela: Will Sanctions Relief Boost Market?

May 20, 2022

This week, news about the US government exploring possible sanctions relief scenarios for Venezuela became a hot topic, especially as inflationary pressures have sent gas prices at the pump soaring.  While some analysts claim this, for now, could only be an incentive to bring the Maduro government back to the negotiating table, it is worth exploring the potential impact on the crude tanker markets.

Current Venezuela crude oil production stands at about 650,000 b/d according to the latest data from JBC Energy (Figure 1).  This figure is likely to trend upwards even without sanctions relief, especially after some ...

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Tankers – When Does Investing Makes Sense?

May 13, 2022

There is a misconception that cyclicality in the tanker markets follows the changes in oil supply and demand.  Historically cyclicality in tankers has less to do with underlying oil fundamentals and more to do with owners’ tanker contracting behavior.  To put it simply, when market returns are favorable, owners are increasing tanker orders and filling up yard capacity (this is true for all segments, not just tankers).  Naturally, these vessel orders lead to the next high supply environment, whereby this oversupply pressures earnings, stalling ordering and resulting in the next upward cycle as deliveries grind lower – a situation we are ...

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Crude Balance Revisions: More Headwinds

May 6, 2022

Revised global crude data is beginning to verify the tightness observed in the physical markets after the Russia-Ukraine war began.  For April, we saw the projected balance length increase to 691,000 b/d, likely the highest surplus for the entire year, but still far from adequate to produce any meaningful results for the tanker markets.  In fact, despite the length, we project an estimated 0.15 million b/d of draws for the first half of the year. 

With demand on refineries expected to increase going into the summer months in the northern hemisphere and structural challenges from Russian ...

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