Giant Oil Tankers Are Losing Almost $7,000 a Day Amid OPEC Cuts

Daily earnings have slumped to the lowest since at least 2017 Rates hit by OPEC production cuts and an oversupply of vessels

tanker - Marcelo del Pozo - Bloomberg

Times are getting tougher by the day for oil tanker owners.

Losses on benchmark route have deepened as OPEC+ extended output cuts

Tanker rates have been hit by a host of factors. Firstly, the Organization of Petroleum Exporting Countries and its allies are withholding near-record amounts of oil, and surprised the market last week by extending that strategy into April. There’s also an oversupply of ships, which has been compounded by the unwinding of volumes of crude stored at sea. For much of last year, those volumes kept tankers off the market, and sent daily earnings soaring.

“The decision from OPEC to extend the production cuts certainly did not do the short-term market any favors as volumes will continue to underwhelm,” Fearnley Securities analysts including Espen Fjermestad wrote in a report.

Still, there’s logic to owners taking unprofitable cargoes. Oil tankers receive so-called approvals from the companies that hire them. So if a ship spends a long time without being chartered, those approvals can be jeopardized.

 

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Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor.   He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino. Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.