May 15, 2013
Oil tanker trade grows fastest in a decade
Ajay Makan, London Correspondent
May 12, 2013
Oil tanker trade is growing at its fastest rate in a decade as the boom in US production forces exporters that in the past supplied the American market to seek new customers further afield.
The number of oil tonne-miles – a proxy for the global oil trade that captures both the volume traded and the distance travelled – surged last year by almost 10 percent to a record 7.8tn tonne miles, according to Icap Shipping, a brokerage. The data covers the major oil importers, who account for 80 per cent of seaborne trade.
The sharp rise comes even as the volume of oil traded has flatlined, and reflects crude being shipped much longer distances as oil tankers sailing from West Africa and Latin America travel to India and China instead of the US.
The increase in seaborne oil trade will generate welcome additional revenue for major tanker companies such as Bermuda-based Frontline and US-based OSG. Tanker rates have fallen to a fraction of their 2008 peaks, as the market has had to absorb a wave of new vessels ordered before the financial crisis.
The changing pattern of the oil trade is putting pressure on key transit points to Asia such as the Strait of Malacca, a narrow maritime route into China, in a stark illustration of how the US shale revolution is creating new security dilemmas.
“The increase in US production is changing trade flows and causing increased pressure on some of the world’s major choke points,” said David Goldwyn, a consultant who was previously the US state department’s top diplomat for oil affairs. “For global energy security, that means increased vulnerability to piracy.”
The boom in US production is in particular forcing Venezuela, Nigeria and Angola, all members of the Opec oil cartel, to find new customers for their output.