THE tanker market has seen good fortunes this year despite the coronavirus pandemic, but for those prepared to believe it, the rest of the year looks very uncertain.

After three months of Opec-plus group production cuts, tanker markets are feeling the pressure with both crude and products sector earnings moving lower in July, according to Maritime Strategies International.

The consultants believe that the realities of the largest quarterly drop in global oil demand ever seen is not going to present truly sustainable positive conditions for the tanker market and expects third quarter of the year average aframax one-year time charter earnings to be $19,900 per day.

“One area where conditions have not proved as extreme as expected has been floating storage and its wider market fundamentals view has reduced the impact of this on 2020 conditions, despite overall volumes still being extremely high by normal standards,” MSI said.

MSI tanker market analyst Tim Smith expects the downward trend to continue with earnings moving even lower in the fourth quarter of the year and further into the first quarter of 2021 with high stock levels meaning that as oil demand recovers, drawdowns will weigh on global trade.

“Production cuts will still be in force, even though Opec-plus is in the process of lifting output. US crude production has also fallen steeply, but exports have not seen as big a drop, as US refinery throughput also fell sharply in the second quarter of the year. As refining recovers, it will also reduce the pool of US exports,” he said.

However, partially replacing the effects of floating storage are port delays, with a surge in volumes congesting terminals and constraints imposed by coronavirus impeding logistics.

These have been prevalent in China as a glut of very large crude carriers has built up, but there are also substantial delays elsewhere in Asia, the US and Europe.

This friction is likely to support deadweight demand in 2020 despite the drop in trade volumes, but like floating storage the effect will be temporary, according to MSI.

Mr Smith said: “Across 2020, there has been a clear increase in average delays. India has seen significant delays since April, after a number of ports declared force majeure, and following high crude import levels, vessels at Chinese ports are experiencing prolonged delays, with over 30 VLCCs seeing delays of more than 10 days off China in July, and that number is growing.

“Less well publicised have been other areas including Asia, Europe and the US. This will support deadweight demand in 2020, countering the huge drop in trade volumes and floating storage though, there is a notable ‘grey area’ around their impact.”