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The excess of the market led to the fact that the producers of oil and petroleum products went the extra mile and started looking for unusual storage of fuel. If earlier such companies demand for very large oil tankers (very large crude carriers, VLCC), they are now forced to switch to the smaller vessel. This writes the Financial Times.
The peak demand for VLCC, which can accommodate up to two million barrels, was now to find a free is almost impossible, so the price of freight began to fall. Now the cost of hiring a VLCC fell to 167 thousand dollars per day.
The demand and price for tankers below by volume, on the contrary, went up Talking about tankers, Long Range 2 up to 800 thousand, and Long Range 1, capacity from 345 to 615 thousand thousand barrels. Price freight first rose to a record 173 thousand dollars per day, the second is doubled to 112 thousand dollars per day.
Global consumption of oil and oil products is usually located at around 100 million barrels a day, is about the same. However, due to the coronavirus, when the majority of industrial enterprises is suspended, demand fell by 30 million barrels per day, which led to an oversupply.
For this reason, almost all the stores on land already filled or leased, many refiners are forced to turn to floating storage. According to traders, there are other factors that affect the increase in the cost of freight. Because of the coronavirus hampered unloading at many ports, especially in the US, this leads to the fact that vessels are redirected to those countries where unloading can occur without significant delay.
“The current record rates of freight clearly will be short-lived, but while there is a shortage of tankers, prices will probably be high in the coming months,” said analyst Clarksons Frode Mercadal.
Tankers already form a tube on the water around the world. In the narrow Singapore Strait, which, together with the Malacca connects the Indian and Pacific oceans, was formed by a giant tube of 60 tankers, and in the area of California 30 tankers were at anchor, from-for falling of demand for raw materials the courts have nowhere to go.
Experts estimate the excess of supply over production of 25 million barrels. The OPEC deal+ needs to cut oil production to 9.7 million barrels per day since may 1, however, this is likely to be insufficient.
Video, photo All from Russia.