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As the world is moving towards

As the world is moving towards a global slowdown and the energy crisis intensifies worldwide, Europe facing its “coldest” winter, the demand for crude oil and products is slowing. Oil producing countries have understood that they have to take oil off the market in order to achieve prices above USD 85-90 per barrel and that is exactly what they did. OPEC and its allies agreed on 5th October to reduce their output by 2 million barrels a day, the biggest cut since 2020. Lower OPEC production and a likely loss in Russian production, because of the war sanctions, has created an immediate oil price surge, resulting in the WTI crude oil price to jump from USD 85 to USD 92 per barrel (8% up) and the Brent crude oil price to hike to USD 97 from USD 89 per barrel (9% up). Analysts predict that a rise of oil to USD 100 per barrel is very likely to happen by the end of the year.

We remain to see its repercussions on the tanker market, as a production cut is a potential “threat” to the further improvements in the wet market. In the meantime, the European Union approved the eighth package of sanctions against Russia, including stricter measures in steel and tech products trade, as well as an oil price cap implementation for Russian seaborne crude oil deliveries to third countries through European insurers. Europe has to seek and replace 2 million tonnes of Russian diesel imports by 5th February, when the ban on refined petroleum products will effect. To meet winter heating demands, the International Energy Agency estimates the EU will require 300,000-500,000 barrels of refined products per day. China could be Russia’s perfect replacer, as the country has increased by 15 million tonnes to its 2022 oil export quota, which includes 13.25 million tonnes of gasoline, diesel, jet fuel, and 1.75 million tonnes of low-sulphur marine fuel. That scenario could boost the product tanker by increasing the tonne miles.

The dry market has shown positive signs during the past week, with larger segments touching levels not seen since late July 2022. The BDI closed the week at 1,961 points, 2% down from its 3-month high, the Capesize market reached 2,553 points before easing to 2,396 points, while the Panamax market has also recorded a rise closing to 2,235 points, the highest since early July 2022, despite China’s Golden Week. However, it is not the first time that the dry market, and mainly the Capesize sector increased during China’s celebration of Golden Week. Back in 2021, on 7th October BDI and BCI surged to 5,650 and 10,485 points respectively their highest levels not only for the whole year of 2021 but also for the last 13 years. Furthermore, on 6th October 2020, the BDI stood at 2,091 points, the highest level for the whole of the 2020 year, while the BCI touched 4,208 points, close enough to 2020’s highest. The smaller sizes have also drawn an uptick with the BSI & BHSI closing the week at 1,706 points and 1,033 points accordingly, an increase of 15% and 20% respectively m-o-m. The dry bulk market may gain more momentum by the end of 2022 if China’s COVID-19 restrictions have eased, so infrastructure investments and steel production pick up pace, resulting in a demand increase for commodity shipments. China’s adherence to zero-COVID has stunted growth, prompting economists to revise down gross domestic growth forecasts for the world’s second-largest economy. Some analysts are optimistic that President Xi will use the Communist congress, which begins next Sunday, to ease his contentious zero-COVID policy that has throttled growth and created a cascade of social and political problems.

On the war front, the UN-backed grain deal that is helping Ukraine to export tonnes of wheat is under strain. A surge in the number of dry bulk vessels has created a backlog of about 120 bulkers, waiting to sail to or from Ukrainian ports. The vessels used in this trade are usually older and smaller but each one has to be inspected by Ukrainian, Russian, Turkish and UN authorities based on the trade agreement. The times that vessels are having to wait for inspections in Istanbul has risen from 5 to 6 days, to between 10 and 15 days, increasing the demand for more inspectors from all the involved sides. Russia had been reluctant to send additional inspectors to help clear the backlog increasing the heat with the Ukrainian authorities. The backlog that has been created is a testament to the success of the trade deal as more that 6.5 million tonnes of agricultural commodities has been added to the trade supply and the seaborne trade in the Black Sea ports has been kept alive. Every 120 days, the agreement has to be renewed, and the first renewal will take place on November 19, when Ukrainian and Russian authorities are expected to begin a new but difficult round of negotiations.

Sale and Purchase:

In the Capesize sector, the “Agia Trias” - 186K/2002 Kawasaki was sold for USD 15.5 mills to clients of Beks. The BWTS fitted Panamax “Bellatrix” - 77K/2006 Oshima was sold for low USD 14 mills to Greek buyers. In the Supramax sector, Japanese buyers acquired the BWTS fitted “Ocean Adventure” - 58K/2015 Tsuneishi for low USD 23mills. Last but not least, the BWTS fitted Handysize “Lodestar Pacific” - 33K/2015 Shin Kurushima gone for high USD 19 mills to Greek buyers.

In the wet S&P activity, the BWTS & Scrubber fitted Suezmax Ice classed 1C “Cap Guillaum” - 159K/2006 Samsung found new owners for USD 35 mills. In the LR2 sector, the “Alburaq” - 113K/2008 HHI & the “Sea Legend” - 113K/2007 HHI were sold for USD 70 mills enbloc. Clients of Torm acquired 4x CPP LR1s, the “Alpine Plymouth” - 75K/2011 HMD, the “Alpine Pacifica”- 75K/2011 HMD, the “Alpine Pearl” - 75K/2011 HMD & the “Alpine Pembroke”- 75K/HMD for USD 110 mills enbloc. Finally, the Shallow draft/ Oil tanker MR1 “Synergy”- 35K/2020 Fujian Mawei reported sold for USD 31mills to clients of Union Maritime.

Xclusiv Shipbrokers Inc.