New energy market crisis: Lack of tankers

During a time of severe energy market crisis, oil and gas are constantly being mentioned, but there is one aspect that to be ignored: what to transport those vital energy resources.

Demand for tankers has increased since the European Union imposed sanctions on Russia in the spring and this trend will continue to increase in the coming months when the embargo officially takes effect.

Bloomberg reported this week that shipping companies are scrambling to get as many tankers as possible before the embargo goes into effect in December on crude oil and two months later on other resources.
The report notes that the tanker is specifically needed to continue shipping Russian oil and fuel in directions other than Europe because the EU will no longer buy oil.
The EU's response to the Russia-Ukraine conflict has caused a stir in the tanker market, along with shipping costs.

Since February 24, demand for tankers has skyrocketed and is likely to continue to soar going forward, Svelland Capital's Tor Svelland told CNBC in August.
Very few new tankers have been built in the last few years and this takes time to improve. Shipment oil supplies may continue to be tight, pushing oil and fuel transportation costs higher.
In early August, Bloomberg reported that the global tanker market is seeing the strongest demand in more than two decades. Citing data from Clarkson Research Service, the report said the average daily profit for a vessel carrying oil products in the 14 weeks to August 8 surpassed 40,000 USD, the highest level since 1997.

Currently, this number is likely to be even higher and continue to grow as demand for the fuel outstrips supply in the coming months. The fuel market is already tight, but with the EU embargo on Russia coming into effect, it will become even tighter, increasing competition even more as the number of tankers is limited.
Not only transporting Russian oil and fuel to locations outside of Europe, the market also needs ships to deliver oil and fuel to Europe from non-Russian destinations such as China, India - where Russian crude oil is processed into fuel, then exported to Europe.
The shortage of tankers will also significantly affect fuel prices. The global fuel market is tightening and shows no signs of improving for next year.
Citing S&P research, Reuters attributed this to a record drop in global refining capacity - about 3.8 million barrels per day from March 2020 to July 2022.
While refining capacity contracted, fuel demand increased by 5.6 million barrels per day, creating a large gap between demand and supply based on refining capacity. According to S&P, an additional 2 million barrels per day will be added to the market by the end of next year.
However, this is also uncertain as refiners are skeptical that accelerating the energy transition will turn their new plants into stranded assets.
Due to the tight supply situation, an increase in fuel prices is expected. This leads to a strong "pivot" as giant Russian fuel importers such as India and Saudi Arabia are looking to resell fuel to Europe at high prices, the same way China is doing with Russian LNG.
Meanwhile, the US faces its own problems with fuel inventories, especially distillates, diesel and jet fuel. This means that Europe can hardly expect help from the US because they simply do not have enough diesel to export.
The shortage of tankers and the complicated relationship between the parties will make fuel prices more expensive this winter. At that time, the anti-inflation efforts of many countries may be ruined.