KUALA LUMPUR: The ban on Russian crude oil could accelerate the recovery of tanker rates as vessels are rerouted to more distant shipping destinations, says CIMB Research.
The broker said in a note that the bull case scenario is for tanker demand to grow more than 7.1% this year as Russia exports, ostracised in the US and Europe, are shipped to further destinations, including China
Adding to the tanker demand, Europe in turn is expected to replace its Russian crude oil imports with more distant sources of crude oil while Iran could also contribute to an extra 3.8% of seaborne crude oil exports if a nuclear deal is reached.
"On the supply side, the global fleet of tankers may increase by less than 3.5% in 2022F or even decline because Russia’s Sovcomflot (which owns 1.5% of the global fleet) may find itself unable to trade overseas, and if the subterfuge fleet of aged tankers currently serving the illicit Iranian oil exports are scrapped, potentially removing 2.6% of the global fleet of crude oil tankers, in our view.
"After a long winter of low tanker rates in 2H20 and 2021, it may finally be time for the crude tanker shipping market to claim its place in the sun," said CIMB.
Among local players, MISC Bhd
's AET could be a beneficiary of the increase in aframax spot freight rates following the outbreak of the Russia-Ukraine war as 40% of its aframax fleet is trading on the spot market.
"If aframax freight rate strength spills over to the VLCC and suezmax vessel classes (also due to the potential return of Iranian barrels), and spreads more widely to aframax routes outside of the Russian ports, AET may benefit more.
"The bear case scenario is if Russian crude oil supplies are completely ostracised, which could lead to 9% lower seaborne crude oil exports, although this is unlikely as China will likely continue to buy from Russia and other countries may ramp up crude oil supplies to compensate, motivated by very high crude oil selling prices," said CIMB.
The broker said in a note that the bull case scenario is for tanker demand to grow more than 7.1% this year as Russia exports, ostracised in the US and Europe, are shipped to further destinations, including China
Adding to the tanker demand, Europe in turn is expected to replace its Russian crude oil imports with more distant sources of crude oil while Iran could also contribute to an extra 3.8% of seaborne crude oil exports if a nuclear deal is reached.
"On the supply side, the global fleet of tankers may increase by less than 3.5% in 2022F or even decline because Russia’s Sovcomflot (which owns 1.5% of the global fleet) may find itself unable to trade overseas, and if the subterfuge fleet of aged tankers currently serving the illicit Iranian oil exports are scrapped, potentially removing 2.6% of the global fleet of crude oil tankers, in our view.
"After a long winter of low tanker rates in 2H20 and 2021, it may finally be time for the crude tanker shipping market to claim its place in the sun," said CIMB.
Among local players, MISC Bhd
's AET could be a beneficiary of the increase in aframax spot freight rates following the outbreak of the Russia-Ukraine war as 40% of its aframax fleet is trading on the spot market."If aframax freight rate strength spills over to the VLCC and suezmax vessel classes (also due to the potential return of Iranian barrels), and spreads more widely to aframax routes outside of the Russian ports, AET may benefit more.
"The bear case scenario is if Russian crude oil supplies are completely ostracised, which could lead to 9% lower seaborne crude oil exports, although this is unlikely as China will likely continue to buy from Russia and other countries may ramp up crude oil supplies to compensate, motivated by very high crude oil selling prices," said CIMB.
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