Once slippage from 2018 is accounted for, some 70 plus newbuilding VLCCs are due for delivery next year, 24 of which are due in the first quarter. A glimmer of hope could be taken from the potential for as many as 60 VLCCs to go in for scrubber retrofitting at some stage next year.
However, on an annualised basis, this may only account to the equivalent of just four to six VLCCs taken out of the fleet, assuming each retrofit takes one month.
Of course, there are sensitivities on timings. If the bulk of the retrofits are concentrated in the second half of 2019 then the impact might appear greater, but on balance the significance could be limited. It also needs to be considered that some retrofits may take place during normal drydockings. Whilst this does not negate the impact, it must be considered that each year a certain number of drydockings always take place.
The potential downside is not just for VLCCs. All crude carriers will be impacted.
Beyond OPEC cuts, Aframaxes face a risk of lower production from Russia, Suezmaxes will also be impacted by lower exports from the Middle East, Russia and perhaps West Africa, as Nigeria is now willing to participate in the cuts.
The counter argument to this negative tone is that exports from the Atlantic Basin (in particular the US) will continue to rise, offsetting the lost output from the Middle East (see story above).
It is debatable whether the anticipated demand increases will be sufficient enough to absorb the high fleet growth expected next year, Gibson warned.