However, many units that have been recently released from floating storage, or are still on storage duties, are elderly, which may prove difficult for them to find trading opportunities, Gibson Shipbrokers said in a report.
According to AIS tracking, some of the ageing tankers that came off storage in recent months are not currently trading and are idle in ballast - for weeks in some cases.
Whether they will find further storage employment, resume trading or simply leave the market for good, remains to be seen, the broker said.
VLCC floating storage has been an important feature of this sector in recent years. While Iranian nuclear sanctions were in place, a significant portion of NITC’s VLCC fleet was used for storage of Iranian crude and condensate.
From early 2015, the tanker industry also witnessed a gradual increase in VLCCs employed for non-Iranian floating storage on the back of strong gains in the Middle East crude production in 2015/2016, which translated into a major build up of land-based inventories, supporting demand for tanker storage.
Finally, the number of VLCCs absent from the trading market was further boosted by tonnage in other non-trading activities, primarily fuel oil storage around the Singapore area.
The number of tankers absent from trading operations peaked in 2016, fluctuating between 50 to 60 units for most of the year. The international agreement reached regarding the Iranian nuclear developments translated into a rapid release of the NITC tankers from floating storage in late 2016/early 2017.
However, this was to a large extent offset by robust demand for non-Iranian storage, aided by declining freight rates and persistently high land-based oil inventories through the first half of this year.
A further drop in floating storage was seen last month, as the OPEC led production cuts have finally started to bite. The total number of non-trading units had fallen to just 34 by the end of August, the lowest level since December, 2014. The number of VLCCs in non-Iranian floating storage declined by 10, while a further two VLCCs were released from the Iranian floating storage.
Further releases from storage duties are likely. However, the ongoing rebound in US crude output tempers with the rebalancing efforts. At the same time, Nigeria and Libya, where production has increased notably, from the lows seen last year, explains the little enthusiasm of these countries to apply any restraint to their output levels.