Tankers To Stay the Course During 2023
The tanker market is expected to stay firm during 2023, with both demand and supply fundamentals expected to help the market to remain at high levels.
The strength of the tanker market this year has prevailed against a gloomy economic outlook, with high inflation and hawkish monetary policy dominating sentiment in financial markets. However, despite this backdrop, oil production growth has surged by 4.7mbd this year, driven largely by gains in the Americas and the unwinding of OPEC+ production cuts, whilst refinery throughputs also gained 2.3mbd year on year as diesel refining margins strengthened on the back of recovering demand, gas to oil switching and supply concerns from Russia.
High freight rates and demand for older tonnage (much of which will likely trade Russia) have also led to exceptional increases in asset values. The price of a 10-year-old Aframax has increased more than 50% from January to December, reaching levels not seen since 2008. Newbuild prices have also continued to rise this year, which depending on the asset size, are up 5-8%. Overall, the tanker market in 2022 has been transformed owing to terrible circumstances. It is impossible to say how long the war will persist, but for now, with few signs of peace, and permanent changes to the world’s relationship with Russia, shipowners have good reason to remain bullish into 2023.
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