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Friday, 20 March 20
VOLATILITY TO INCREASE IN TANKER MARKET FOLLOWING OIL PRICE WAR - DREWRY
Crude oil prices plunged by more than a third in the past week after OPEC+ failed to agree on production cut as demand softened in the aftermath of coronavirus (COVID-19). In its recent report, the IEA estimates global oil demand at 99.9 mbpd in 2020, which is around 90,000 bpd lower than in 2019 and a sharp downgrade from the agency’s forecast in February, which predicted global oil demand will grow 825,000 bpd in 2020.
The market expected OPEC+ to cut supply as the COVID-19 epidemic has spread from China to Europe, the Americas and Middle East. However, the negotiations failed due to strong resistance from Russia, which is of the view that the policy of capping production by OPEC+ producers to support the oil price is facilitating the development of US shale oil, with Russia losing its market share to increasing exports from the US.
After the failure of production cut talks in Vienna, Saudi Arabia started a price war by slashing the official selling prices for crude for key buyers in the international market and hinted at raising crude oil production to full capacity of 12.3 mbpd from April 2020. The ‘shock and awe’ tactics of Saudi Arabia could be a move to impose maximum pain in the quickest possible way to Russia and other producers, in an effort to renegotiate the proposed production cut and then quickly reverse the production surge and thereafter implement the production cut if a deal is reached.
However, the recent move by Saudi Arabia could lead to:
a) Renegotiation on a production cut between OPEC and Russia
b) Prolonged price war between OPEC, Russia and US producers
If there are fresh negotiations to implement a production cut by OPEC+ producers to accommodate the effect of declining oil demand, crude oil prices are expected to normalise.
But if there is a prolonged price war between Saudi Arabia, Russia and US shale oil producers, lower crude oil prices will lead to some improvement in global oil demand and refinery runs. At the same time, onshore stocking activity will also increase, especially in countries such as China as they build their Strategic Petroleum Reserve. A global supply glut is also likely to lead to an increase in floating storage especially among oil producers.
At the same time, sustained weakness in oil prices will eventually hurt US shale oil producers because of their relatively higher cost of production. In such circumstances, the market share of Middle Eastern crude will increase at the expense of US crude.
Meanwhile, tanker rates surged due to a sudden increase in VLCC chartering from Bahri, Saudi Arabia’s national shipping arm. Bahri fixed at least 18 VLCCs since the Kingdom aims to pump more crude into the market as its price war with Russia escalates. The VLCC earnings on Middle East–China (TD3C) route skyrocketed to $166,000pd on 11 March from $30,300pd on 06 March.
If Saudi Arabia manages to strike a deal with Russia to cut production in the short term, tanker rates will plummet to the pre-price war levels because of the ongoing weakness in crude oil trade on account of the spread of COVID-19 globally. On the other hand, if there is a prolonged price war, tonnage demand will rise initially with the increase in oil demand and stocking activity, which in turn will keep freight rates above pre-price war levels.
However, once sustained weakness in oil prices starts hurting US crude production, Middle Eastern crude will start displacing US crude in Asia. This in turn will squeeze tonne-mile demand for tankers as the distance between the US to Asia is almost double the distance between the Middle East to Asia. Thus we estimate that every barrel per day of annual decline in US exports to Asia at the expense of the Middle East will lead to about a 2.5% decline in overall tonne-mile demand for tankers. Freight rates in such a situation will plunge below the pre-price war levels.
Source: Drewry
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Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY 8% IN Q1 2020 RELATIVE TO Q1 2019 - IEA
We expect global coal demand to fall by 8% in Q1 2020 relative to Q1 2019. This significant drop was driven by lower demand in the electricity sect ...
Friday, 01 May 20
LUKOIL SHARES LUBRICANT EXPERIENCE AFTER FIRST 100 DAYS OF OPERATION ON VLSFO
KNOWLEDGE TO ELEVATE
After 100 days of VLSFO operation, LUKOIL Marine Lubricants is sharing recent experience on VLSFO operation with NAVIGO M ...
Wednesday, 29 April 20
OIL CLOSES IN ON PEAK OVERSUPPLY - WOOD MACKENZIE
Are we now deep in the abyss? Up to our necks in it, if the oil price is any guide. Brent has now tested sub-US$20/bbl in this downturn and WTI sub ...
Monday, 27 April 20
INCIDENT INVESTIGATION: SEARCH FOR THE CAUSE, NOT THE VILLAIN - GARD
Incident investigations often conclude with placing the blame for an incident on the crew. Causes of the incidents are usually identified as proced ...
Monday, 27 April 20
A 58,000DWT VESSEL WAS FIXED DELIVERY SINGAPORE TRIP VIA INDONESIA, RE-DELIVERY WC INDIA, AT $4,500 - BALTIC BRIEFING
Capesize
The tide turned this week for the Capesize market, as voyage rates registered dramatically falling fuel costs. This was led primarily ...
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- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Aditya Birla Group - India
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- Indian Energy Exchange, India
- Minerals Council of Australia
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Global Business Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
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