As explained, the demand is positively impacted in the short term due to the breakdown of the OPEC+ alliance. However, in the longer term, the coronavirus pandemic has “annihilated” global oil demand for 2020.
Freight rates for oil product carriers will be negatively affected by the lower demand but the shipping association expects average freight rates for the year above break-even levels.
What is more, freight rates for crude oil carriers are currently super strong. If and when the geopolitical support eases the oversupplied market, freight rates will likely be below the levels of last year.
Geopolitical tensions that made the OPEC+ alliance break down has subsequently made the crude oil tanker spot freight market erupt. The events that followed the breakdown – and those that are likely to follow, as Saudi Arabia is thoroughly preparing to flood the global oil market – will benefit the crude oil tanker industry specifically while driving fuel costs down more generally, at a time when oil demand generally drops, according to BIMCO.
In massive contrast to the benefits that the crude oil tanker shipping industry enjoys from the geopolitics of the oil market, there is a widespread negative impact from the coronavirus pandemic.
Moreover, the “Phase One” agreement of the US-China trade war is not delivering on its promises. Even before the effects of the coronavirus, the “Phase One” agreement between China and the US failed to boost volumes of the implicated goods in January. This opening is likely to set the tone for the full year, the association believes.
When speaking about supply, newbuilt deliveries from Chinese yards will be slightly lower than previously anticipated, the association further said.
BIMCO has revised its 2020 forecast for the main shipping markets as the coronavirus is impacting global shipping demand for this year negatively. In the container shipping and dry bulk shipping sectors, demand is negatively affected for the full year.
TURKISH MARITIME NEWS