Oil tanker industry struggles with fleet reduction amid growing difficulties
Date
2/26/2024 3:02:48 AM
(MENAFN) The oil tanker sector has long been issuing warnings about the insufficient number of new ships being constructed, a concern that has now been underscored by recent events following Houthi attacks on commercial vessels, which have prompted significant disruptions in global oil trade routes. In 2024, the industry is set to witness the addition of just two new supertankers to its fleet, marking the lowest number of new vessels in approximately four decades and representing a stark contrast to the annual average seen in the millennium thus far, which is down by around 90 percent.
The repercussions of this shortage in new tanker acquisitions have begun to reverberate throughout the market, particularly as tanker owners increasingly opt to avoid traversing the Red Sea, a route fraught with heightened risks. Consequently, freight rates have soared, and journey durations have extended, exacerbating logistical challenges for oil trade operations. Despite efforts by OPEC and its allies, collectively known as OPEC Plus, to stabilize oil prices through market balancing initiatives, the industry faces mounting pressures from the broader global shift towards alternative energy sources, signaling grim long-term prospects for fossil fuel-dependent sectors.
The avoidance of Red Sea transit routes has compounded existing trade complexities, further prolonging the duration of trade exchanges, particularly against the backdrop of ongoing geopolitical tensions such as Russia's conflict in Ukraine. Alexander Saveris, CEO of Euronav, one of the leading players in the oil tanker ownership space, highlighted the tangible impact of these developments on the shipping industry during an earnings call this month. He emphasized the pervasive effects of logistical disruptions on crude oil and product tanker operations, illustrating the far-reaching implications of the evolving geopolitical landscape on maritime trade dynamics.
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