By Alex Longley and Weilun Soon (Bloomberg) — Shipowners around the world have ordered a record number of new oil supertankers, breaking the previous record set in 2008 that led to an oversupply and a crash in shipping...
By Alex Longley and Weilun Soon (Bloomberg) — Shipowners around the world have ordered a record number of new oil supertankers, breaking the previous record set in 2008 that led to an oversupply and a crash in shipping rates.
Currently, there are 262 supertankers on order globally, each capable of carrying 2 million barrels of crude oil, according to Clarkson Research Services Ltd., part of the largest shipbroker in the world. This number is enough to handle all of the extensive US crude oil export program and surpasses the peak reached in October 2008.
The ongoing surge in tanker orders, along with concerns about a potential future downturn, was a hot topic at the recent Posidonia industry gathering in Athens.
The market has significantly benefited from the ongoing conflict in Iran. Shipping rates have doubled since the conflict began and have occasionally jumped to record levels of several hundred thousand dollars a day due to disruptions in the flow of oil.
However, the ongoing blockage of the Strait of Hormuz has also reduced cargo shipments, which could negatively impact earnings over time, especially if the conflict ultimately leads to decreased long-term demand.
“It’s temporarily better” than the market boom from 2004 to 2008, said George Economou, a Greek shipping billionaire and founder of TMS Group, in Athens. “But if it continues, it’s going to be bad for the tankers.”
Since the conflict began, the market capitalization of 15 of the largest listed tanker stocks has at times exceeded $60 billion, according to Bloomberg data. At the start of the year, it was less than half that figure, highlighting the massive growth in this crucial segment of the oil trade.
Big Buyers
Another factor contributing to the wealth of many supertanker owners is an anonymous South Korean shipowner, backed by MSC Mediterranean Shipping Company SA, who has been aggressively purchasing tankers at high prices in recent months.
This has left many companies that sold to Sinokor with smaller fleets but more cash, some of which they are reinvesting into new vessels.