OPEC's decision seen as ?a double joy, because the global economy needs cheap oil to get back on track.
OPEC's decision on Sunday to not enforce new supply cuts has brought some respite to tanker markets which have been under pressure from tonnage oversupply due to falling cargo volumes.
OPEC agreements since September to cut a total of 4.2 million barrels per day (bpd) in supply to the market has already been making a negative impact on tanker activity and freight rates for weeks now.
Some OPEC members had at its Sunday meeting in Vienna pressed for further cuts, but others favoured better compliance with previous cuts before any new measures were considered.
According to OPEC figures, the 12 member states have so far delivered about 80% of the 4.2 million bpd in cuts that have been agreed since September.
Further pledges to cut more supply would ?definitely put owners in a new state of panic given that earnings are currently already below average,? said one broker.
"The world economy is crucial. Short-term gain would be to the long-term detriment of OPEC"Another broker described OPEC's decision as ?a double joy, because the global economy needs cheap oil to get back on track, and tanker demand depends very much on a recovering economy boasting increased oil demand.?
OPEC was quoted saying that ?the weakness of the world economy, which effectively receives a financial stimulus from cheaper oil, was a central motivation? behind Sunday's decision.
Analysts believe that the oil cartel needs to avoid the kind of damage to growth that would only further limit energy consumption.
Spot double hull rates sank about 5 Worldscale points
?The world economy is crucial. Short-term gain would be to the long-term detriment of OPEC,? said one analyst.
Bearish global oil demand forecasts have been casting a shadow on tanker markets and the VLCC spot market in particular, which continues to weaken on little activity.
Activity levels are low primarily because cargo requirements are not increasing.
Many are blaming reduced oil output from OPEC.
Benchmark MEG-East double hull VLCC voyages fetched about WS 37 last week, down from the WS 42.5 average achieved in the previous week.
Rates for spot double hull MEG-West VLCC voyages also sank about 5 Worldscale points, averaging WS 32 compared to WS 37.5 in the previous week.
Earnings on both routes averaged around $34,000 per day per vessel according to brokers' estimates.
Average cash break-even earnings for the VLCC spot market is below $25,000 per day per vessel, but break-even rates are calculated differently across the industry, with some companies like Frontline Ltd. reporting its break-even rate to be as high as $34,700 per VLCC.