Conflict pushes oil tanker futures higher

Spanish Market: Crude oil, Freight, Oil products
24/02/22

Oil tanker futures prices in the April-June period rose by around 20pc on major global routes as Russia's invasion of Ukraine increased the likelihood of sanctions limiting available tonnage supply and altering oil trade flows.

Second quarter forward freight agreements (FFA) on the key Mideast Gulf to Asia-Pacific very large crude carrier (VLCC) route traded as high as Worldscale (WS) 46, up by 23pc from yesterday levels, according to a shipbroker. Gains in the route's spot market were similar, with rates increasing by 22pc to WS39 as shipowners capitalized on uncertainty generated by the conflict to pass rising bunkers costs along to charterers.

FFA rates on the US Gulf coast-Europe Aframax route climbed by 19pc to WS120.

The clean tanker FFA market also saw increases.

Prices for the second-quarter FFA contract for the Mideast Gulf-Asia long range (LR1) clean tanker route firmed by 10pc, according to a shipbroker, while Argus spot market rates on the route were flat at WS100.

As part of its response to Russia's invasion of Ukraine, the US placed restrictions on debt and equity financing for Russian state-owned shipowner Sovcomflot, which operates a fleet of 108 oil tankers.

The conflict had the opposite effect on dry bulk futures, which fell today, partially because of a number of conflict-related failed dry bulker bookings.

By Nicholas Watt

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

18/12/24

US funding bill to allow year-round E15 sales

Washington, 17 December (Argus) — A stopgap government funding measure that leaders in the US House of Representatives unveiled late Tuesday would authorize year-round nationwide sales of 15pc ethanol gasoline (E15) and offer short-term biofuel blending relief to some small refiners. The 1,547-page bill, which is set for a vote in the coming days, is needed to avoid a government shutdown that would otherwise begin on Saturday. The bill would fund the government through 14 March and extend key expiring programs, such as agricultural support from the farm bill. It would also provide billions of dollars in disaster relief and pay the full cost of rebuilding the Francis Scott Key bridge in Maryland, which collapsed earlier this year after being hit by a containership. The inclusion of the E15 language, based on a bill by US senator Deb Fischer (R-Nebraska), marks a major win for ethanol producers and farm state lawmakers who have spent years lobbying to permanently allow year-round E15 sales. The bill would also provide short-term relief to some small refiners under the Renewable Fuel Standard that retired renewable identification numbers (RINs) in 2016-18 in cases when their requests for "hardship" waivers remained pending for years. The bill would return some of those RINs to the small refiners and make them eligible for compliance in future years. E15 was historically unavailable year-round because of language in the Clean Air Act that imposes more stringent fuel volatility requirements during summer months. In president-elect Donald Trump's first term, regulators began to allow year-round E15 sales by extending a waiver available for 10pc ethanol gasoline (E10), but a federal court in 2021 struck that down . Federal regulators have issued emergency waivers retaining year-round E15 sales over the last three summers. Enacting the stopgap funding bill would also make it unnecessary for eight states to follow through with a costly gasoline blendstock reformulation — set to begin as early as next summer — they had requested as a way to retain year-round E15 sales in the midcontinent . Oil industry groups last month petitioned EPA to delay the fuel reformulation until after the 2025 summer driving season, citing concerns about inadequate fuel supply and the prospects that a legislative fix would make required infrastructure changes unnecessary. Ethanol groups say the E15 legislative change could pave the way for retailers to more widely offer the high-ethanol fuel blend, which is currently available at 3,400 retail stations and last summer was about 10-30¢/USG cheaper than 10pc ethanol gasoline (E10). Offering the fuel year-round would be "an early Christmas present to American drivers," ethanol industry group Growth Energy chief executive Emily Skor said. House speaker Mike Johnson (R-Louisiana) has faced blowback from many Republicans in his caucus for negotiating such a sprawling bill that has tens of billions of dollars in new spending, after vowing to buck a practice of preparing a "Christmas tree bill" that forces lawmakers to vote on a must-pass bill right before the holidays. Johnson said today the bill remains a "small" funding bill, but that it needed to expand because of "things that were out of our control" such as hurricanes and economic aid for farmers. The Republican backlash could make it more difficult for Johnson to pass the bill, but Democrats are expected to provide broad support. By Payne Williams and Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Argentina touts quarterly economic growth

17/12/24

Argentina touts quarterly economic growth

Montevideo, 17 December (Argus) — Argentina's macroeconomic conditions continue to stabilize, with growth picking up and inflation trending down. The economy expanded by 3.9pc in the third quarter of the year compared to the previous three months, according to preliminary data from the statistics agency (Indec). It was the first quarter-on-quarter growth since President Javier Milei took office a year ago during a deep recession with a promise to overhaul the long-struggling economy. The economy contracted by 1.9pc in the fourth quarter of 2023, by 2.1pc in the first quarter of 2024 and by 1.7pc in the second quarter. While the economy is still down by 2.1pc compared to a year earlier, the government presented the data, together with falling inflation, as evidence that Milei's strategy to deregulate and shrink the state is working. Inflation in November was 2.4pc, a huge decline from the 25pc when Milei took office in December 2023. Accumulated inflation through November was 112pc. According to Indec, private consumption was up by 4.6pc from quarter to quarter and investment by 12pc. The country has had a fiscal surplus for nine months. The currency has stabilized after a brutal devaluation early in 2024 of more than 50pc. Exports grew by 3.2pc from the second quarter and are the most positive economic indicator so far this year. Exports in the first three quarters of 2024 were up by 20pc compared to a year earlier. The energy sector in the GDP calculation increased by only 0.4pc in third quarter, but it plays an important role in the trade balance. The country will have a trade surplus this year close $20bn compared with a $6.9bn deficit in 2023, according to the central bank. Argentina registered its first energy surplus in 15 years in the first half of 2024, exporting $4.81bn and importing $3.79bn. Crude exports were up by 60pc compared to 2023. Oil and gas trade organization Ceph forecasts an energy surplus of $25bn by 2030, based on projections of crude output of 1.5mn b/d and natural gas at 230mn m³/d. The government has reduced from 18 to eight the number of cabinet ministries and eliminated hundreds of regulations. Deregulation and transformation minister Federico Sturzeneggar announced in early December that approximately 4,500 regulations would be eliminated in 2025. But the austerity measures have caused a spike in poverty, with more than 50pc of the population living below the poverty line, up from 41.7pc in December 2023. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Alabama lock to remain closed until spring

17/12/24

Alabama lock to remain closed until spring

Houston, 17 December (Argus) — The US Army Corps of Engineers (Corps) has determined that the main chamber of the Wilson Lock on the Tennessee River near Florence, Alabama, will remain closed until spring 2025 as repairs continue. The Wilson Lock, the first lock on the Tennessee River, closed on 25 September after cracks in the lock gates on both the land and river sides were discovered. The main lock was closed to prevent further damage in the main chamber, although the auxiliary chamber was kept open for navigation. The Corps had been eyeing an earlier opening date for the main chamber since the start of November. Although months of repairs have taken place, the Corps resolved to keep the main chamber closed to preserve the lock and maintain personnel safety. The Corps, in partnership with the Tennessee Valley Authority (TVA), is still assessing the root cause of the cracking. A second de-watering of the gate is scheduled for the first three months of 2025 to repairs. No official date has been set for the lock reopening, although some barge carriers have heard of a late April opening date. A regular 15 barge tow has endured 5-6 days of delay through the lock on average, according to carriers. The Corps' Lock Status Report on the Wilson Lock reported a nearly two-week delay for tows navigating through the lock. This has been costly for shippers by forcing them to pay delay fees. Wilson Lock is the second lock in Alabama to undergo a lengthy closure this year. Most lock and dams along the US river system are over 70 years old, likely resulting in more closures in the coming year. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Lower demand to weigh on VLCC market

17/12/24

Viewpoint: Lower demand to weigh on VLCC market

London, 17 December (Argus) — The VLCC tanker market is facing downside risk moving into 2025 — after a lacklustre fourth quarter of 2024 — as a result of shrinking Chinese demand and the continuation of the Opec+ crude production cuts. Opec+ has delayed the unwinding of 2.2mn b/d cut once again to April 2025, and this may be pushed further as it "can be paused or reversed subject to market conditions". This would contribute to keep crude tanker demand and rates under pressure in 2025, especially as the Opec+ group will also keep in place two other sets of cuts by an additional year to the end of 2026 . VLCC rates in 2024 have also been under significant pressure in the second half of the year because of a slowdown in Chinese oil demand. China is the key destination for VLCCs. It accounted for nearly 40pc of all VLCC voyages in 2024, with Japan and South Korea accounting for another 20pc. The IEA has kept its oil demand growth for China unchanged at 150,000 b/d for 2024. This is far below the 710,000 b/d it was forecasting in January 2024. And this trend is likely to continue in 2025, being partly the result of an increased uptake of electric vehicles, LNG-powered trucks and high-speed rail, according to the IEA. China has also cut export tax rebates on oil products to 9pc from the current 13pc, effective 1 December. This may lead to a decrease in Chinese oil product exports, as players may be discouraged by the VAT rebate cuts and reduce Chinese crude imports, weighing on tanker demand. VLCC rates will receive little support from the newbuild market this year. Tankers deliveries in 2025 are scheduled to be lower, with a 1.2pc increase in overall tanker fleet growth, but ship scrapping rates are slowing down. This should keep tanker availability more or less steady in 2025, but rates could come under pressure from an ageing fleet. The average age of a tanker is now 13.2 years. This increase in vessel ages may lead to further rate discounts — which are typically attached to older tankers. The re-election of Donald Trump as US president could have some impacts on the freight markets heading into 2025, but it is unlikely to offer support to the VLCC segment. Trump has planned to ramp up the US's crude production over the course of his second term. This has brought some market participants to question the extent of the increases and the knock on effects. The US primarily uses Aframaxes and Suezmaxes for crude exports and if the new government's policies lead to an increase in crude exports then the volumes would most likely be carried on tankers in these segments. The US also typically exports more to Europe than to Asia-Pacific, which would also mean a proportional increase in the smaller vessel classes rather than VLCCs. The VLCC market will most likely remain under pressure, particularly early in 2025. And some VLCC shipowners have already started to widen their market scope onto traditionally Suezmax routes from west Africa to Europe to increase earnings. But having VLCCs competing with smaller classes could lead to a more sustained slump in other segments, as it would increase tanker supply on these routes and ultimately weigh on rates. This is because increased competitions for cargoes could lead owners to reduce offers in order to secure work. By Rhys van Dinther Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia to invest $9mn in biofuel production projects

17/12/24

Australia to invest $9mn in biofuel production projects

Sydney, 17 December (Argus) — The federal Australian Renewable Energy Agency (Arena) has allocated A$14.1mn ($9mn) toward two studies for separate biofuel production projects. Australian refiner and marketer Ampol's proposed Brisbane Renewable Fuels project will receive A$8mn toward its A$30.2mn pre-engineering study, Arena said on 17 December, while A$6.1mn will go to grains aggregator GrainCorp's sustainable aviation fuel (SAF) Oilseed Crushing Facility pre-deployment study. Ampol's study will focus on developing more than 450mn litres/yr production capacity for SAF and renewable diesel at the company's 109,000 b/d Lytton refinery near the city of Brisbane. GrainCorp's plans for an oilseed crushing facility will produce 330,000 t/yr of canola seed oil, or about 12pc of the nation's 6.13mn t canola exports in the 12 months to 30 September, for use as SAF feedstock, Arena said. Both Ampol and GrainCorp recently entered an initial agreement with London-based fund manager IFM Investors to explore options for building a renewable fuels business. While Australia is a major exporter of feedstocks for biofuels such as canola and tallow, it imports most of its liquid fuels, with diesel and jet fuel imports averaging 520,000 b/d and 129,000 b/d respectively in the first nine months of 2024. Fellow SAF aspirant Jet Zero received A$9mn from Arena in September, bringing the total outlay from the agency's A$30mn SAF funding initiative to just over A$23mn. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more