Crucial week ahead for tanker market

Tanker owners were mulling their options as more contradictions came from the United States and Iranian peace negotiations updates over the weekend. 

On the one hand, President Trump declared on Saturday night that a deal with Iran had been ‘largely negotiated’ and the Strait of Hormuz would be included in a potential deal. On the other, Iran’s semi-official news agency, Tasnim, said on Sunday that under draft terms of the US-Iran negotiations, the Strait ‘will not return’ to pre-war status, but added more uncertainty by stating that ship traffic would return to previous levels.

Whatever happens in the next few days, the tanker market will take months to return to some semblance of normality. If there is a deal, London-based shipbroker, Gibson, expects some residual hesitancy in transiting the Strait, with only higher-risk owner ready to commit. The voyages are likely to follow tried and tested post-war routes close to the Iranian or Omani coastlines, the broker said, especially as uncertainty remains over the location of possible mines. 

Gibson said that of the 157 mainstream tankers of more than 25,000 dwt lying in the Gulf at the time of its report, 123 were laden and ‘will attempt to exit swiftly’. 

Meanwhile there are 150 ballasters above that deadweight promptly positioned in the Gulf of Oman and ready to be fixed for export cargoes in short order. Freight rates will be high and volatile, the broker predicted, until the risks and hazards are deemed to be low. 

Port congestion is likely, loading schedules will have to re-established, export infrastructure and port operations remain uncertain. But all parties in the supply chain will be keen to get cargoes moving again as quickly as possible. 

However, Gibson also points out that there are further challenges in the longer term. It could take months for tanker positioning to return to normal. 

Significantly more tankers are now positioned in the West largely because of record volumes of both crude and product exports out of the US Gulf. 

Ballasters are unlikely to react immediately and Western-located tankers are weeks away from the Gulf. Their owners will be unlikely to commit to a pricy ballast haul without a paying cargo to cover the eastbound leg, Gibson said. 

Overall, the shipbroker’s analysis is cautiously optimistic. But some on the ground in the Gulf are less so.

ADNOC CEO, Sultan Al Jaber, attending an Atlantic Council event last Wednesday, said: “Even if this conflict ends tomorrow, it will take at least four months to get back to 80 per cent of pre-conflict flows, and full flows will not return before the first or even second quarter of 2027”.

Analysts said that this was among the most pessimistic of views from top industry executives. However, it underscored the severity of what the International Energy Agency has called the largest-ever energy crisis because of the almost total closure of the Strait.

Courtesy: Seatrade Maritime New