Ton-mile demand, a proxy for demand for oil tankers, has slumped in the summer as OPEC’s oil production dropped to a three-decade low and exports were drastically cut as part of the OPEC+ deal, according to a Lloyd’s List Intelligence analysis.

Ton-mile demand – measuring the crude oil volumes carried by distance traveled – dropped by 18.6 percent year over year in July. The plunge in crude tanker demand in July was the steepest fall since the coronavirus started to impact global oil markets, Michelle Wiese Bockmann writes in the analysis. The drop was mostly due to the plunge in demand for tankers in the Middle East, whose key producers and members of OPEC are cutting production and exports in response to the crash in global oil demand.

Early data from Lloyd’s List Intelligence suggests that demand for tankers will be equally depressed in August.

The ton-mile demand data also suggests that in June and July, non-OPEC exporters gained market share in terms of tanker demand at the expense of OPEC, according to Lloyd’s List.

For August, demand for tankers in Saudi Arabia at least is not expected to jump, although OPEC+ began easing the record collective cut by 2 million barrels per day (bpd) on August 1.

Saudi Arabia has said it would not be rushing into ramping up crude oil exports this month, as the increased production will go to domestic power generation, for which Saudi Arabia burns more oil during the summer months.

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In the brief Saudi-Russian price war in March and early April, supertanker owners were the winners, as the spat coincided with the start of the lockdowns in major economies and increased the global oil glut. Shipping companies had a field day with Saudi Aramco booking tankers en masse to flood the market with oil, while traders scrambled to charter tankers for floating storage to sell at higher prices later.

According to Teekay Tankers, crude tanker spot rates are likely to be weaker in the second half of 2020, as more vessels will be returning to the trading fleet from floating storage.   

By Tsvetana Paraskova for Oilprice.com

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