Cut in Saudi output to hit tanker rates, but prospects may brighten
While the Saudis’ output halt and the likely resulting spike in pump prices are expected to hit oil demand, vessels in the Middle East Gulf region will not move elsewhere before the traditional busy season for tanker shipping, argues one analyst. But if Riyadh can restore production before the peak season ends, the market, also helped by demand for rebuilding crude stockpiles, may give VLCC rates a ‘larger than expected’ push
If the Saudis can reduce the fall in output to 2m barrels per day, additional long-haul crude flows from the US and West Africa should then be able to support tonne-mile demand and shore up rates,says Shenwan Hongyuan Securities analyst Yan Hai
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