The Tanker Market Set to Benefit from Improving Global Economy and Increased Asian Oil Demand
The tanker market is expected to benefit from improving global economy conditions and increased Asian oil demand growth as we head into 2024. Shipbroker Xclusiv has stated that the negative outlook for economic growth is coming to an end as central bank decisions have spread optimism in the market. The Federal Reserve (FED) has kept interest rates steady at 5.25%-5.5% for a third consecutive meeting. Additionally, the European Central Bank (ECB) and Bank of England (BoE) have voted to keep interest rates unchanged, implying that there will be no more increases and the possibility of cuts within 2024.
Source: Xclusiv
Despite the negative impact of rising interest rates on economic growth, the International Energy Agency (IEA) reports that strong supply from non-OPEC+ countries, such as the United States and Guyana, will be more than enough to meet the projected demand growth for 2024. The IEA expects non-OPEC+ supply growth to be significantly higher than demand growth. This surplus supply is explained by factors including the end of the post-COVID rebound in consumption and continued production expansion from non-OPEC+ countries.
Xclusiv predicts that Asia will be the primary driver of global oil demand growth in 2024, with South Asian demand surpassing that of China due to robust economic growth. Refinery runs in South Asia are anticipated to reach unprecedented levels during the first quarter of 2024. Although China has been a significant catalyst for global oil demand growth in recent decades, India is expected to play a more prominent role in the future. Additionally, the market will closely monitor the flow of Venezuelan crude to Asian buyers following the removal of sanctions.
Source: Xclusiv
World leaders at the 28th UN Climate Change Conference have reached an agreement on transitioning away from fossil fuels and working towards the phasedown of unabated coal. Nations have committed to actively participate in the shift towards sustainable energy and achieving net-zero emissions by 2050. Global greenhouse gas emissions are expected to peak in the next few years, allowing countries the flexibility to establish their own transition pathways. However, objections from crude oil producers such as Iraq, Kuwait, and Saudi Arabia were raised against language emphasizing a phaseout or phasedown of fossil fuels.
Nikos Roussanoglou, Hellenic Shipping News Worldwide