In early September Shell lifted force majeure on Bonny Light exports, with loading scheduled to reach 220,000 barrels per day in October. The Qua Iboe exports, the biggest Nigerian crude stream (estimated at over 300,000 barrels per day before the force majeure) were also expected to re-start as early as late September.
Finally, shipments of Forcados crude were anticipated to resume soon, with a preliminary October loading programme reported at 230,000 barrels per day.
More crude from Nigeria has led to a rebound in Suezmax rates out of the region, with the TCE earnings for West Africa – UK/Continent rising from just under $5,000 per day in mid-August to around $35,000 per day last week.
There is possibility of more barrels loading in the Mediterranean as Libya’s National Oil Company is in the process of re-opening Zueitina, Ras Lanuf and Es Sider oil terminals. The company has said that it hoped to triple domestic crude output by the end of this year.
So far, the success has been mixed. Government officials have said that one Aframax loaded and departed Ras Lanuf, but loading operations have been temporarily halted due to military clashes.
More evidence supports the view that crude exports out of the Black Sea will increase. CPC exports are scheduled to rise in October, with further gains planned towards the end of this year and throughout 2017 amid rising offshore and onshore production in the Caspian Sea region.
The combination of higher volumes out of the Black Sea, coupled with positive sentiment, offered further support to the tanker market.
Despite firming rates and earnings in a number of regional trades in the West, the VLCC MEG market remained weak, with spot earnings for Middle East – Japan barely covering fixed
operating expenses.
On a more fundamental level, there was a growing opinion between oil industry practitioners that oil markets are likely to remain oversupplied well into 2017. There are a number of reasons for that, including growing prospects for Nigerian, Caspian and Libyan crude production, Gibson said.
The resilience of the US shale industry has prompted a number of leading oil consultancies to revise upward their expectations for US crude oil production. The IEA has also voiced concerns of slowing demand growth in key markets, which together with anticipated increases in crude output, points to a sizeable excess in supply over demand at least through the first half of 2017.
If these forecasts are correct, the impact on the tanker market will largely be positive, at least in the short term. Tanker demand will benefit from incremental growth in crude exports, while oversupplied oil markets increase the likelihood of continued operational and forced tanker storage.
Yet, as is always the case with forecasts, there are uncertainties. One of the most immediate risks is a possible crude oil production freeze deal between a number of crude exporters, with a decision expected this week.
The question is whether countries such as Nigeria, Kazakhstan and Libya, where the near term prospects for production gains are the strongest, agree to participate, Gibson concluded.