In the fourth quarter, the Israel-Hamas conflict led to increased geopolitical tensions, especially within the oil sector, reshaping dynamics within the industry. After the end of September, freight rates firmed in October, influenced notably by Russia. Based on a Bloomberg study, Russia successfully sold a significant volume of crude oil exports surpassing the $60/barrel price threshold. The effectiveness of sanctions seems to have waned, potentially because of inadequate oversight and enforcement of the oil price restriction policy.
Shipping stakeholders are closely monitoring the evolution of crude oil freight rates as the year draws to a close. An important question arises: Which ship size segment has benefited the most from the current geopolitical events? Notably, the Suezmax and Aframax segments experienced substantial gains mainly driven by an unaffected flow of Russian crude oil trading, while the VLCC showed signs of recovery, primarily driven by increased Chinese crude oil imports to meet domestic demand.
At the same time, the US crude oil market saw a significant increase in exports, reflecting a dynamic shift in global oil trading patterns. South Korea in particular emerged as one of the most important destinations for US crude oil exports, surpassing the volume of Chinese crude oil imports.
In examining the oil demand growth forecasts, which significantly influence crude oil freight revenue development, the IEA's December report estimated world oil demand is on track to rise 2.3 mb/d to 101.7 mb/d in 2023, but this masks the impact of a further weakening of the macroeconomic climate. Back in its monthly report of November, the IEA forecast was for a world oil demand rise to 2.4 million barrels per day (mb/d).
It is worth noting that China is responsible for 80% of the expected increase in global demand this year. This adjustment is a sign of the potential impact of challenging global economic conditions and advances in energy efficiency on consumption.
For the coming year, the International Energy Agency (IEA) forecasts a slowdown in supply growth among non-OPEC+ oil producers, with an expected increase of 1.2 million barrels per day in 2024. This represents a slowdown from the current year's growth of 2.2 million barrels per day, driven primarily by the United States. Combined with the decline in demand, these factors could pose a challenge for OPEC+.
In contrast to the IEA's estimates for demand growth, OPEC maintained its forecast for global oil demand growth in 2023 at 2.5 million barrels per day in its monthly report. Its forecast for 2024 also remained unchanged from the previous month at 2.25 million barrels per day. Although the difference between the International Energy Agency's (IEA) and OPEC's forecasts for demand growth in 2024 has narrowed slightly, it still stands at 1.15 million barrels per day.
In the following sections, we will describe the most important trends in crude oil tanker shipping. It is worth noting that the geopolitical changes facing the tanker shipping industry coincide with the current energy transition, where the industry is striving to get in line with the upcoming net zero targets. Nevertheless, the tanker industry faces a variety of challenges, particularly in developing countries where infrastructure is not yet prepared for a seamless transition to a net zero target.
Data Source: Signal Ocean Platform