The tanker market is experiencing a deep crisis in recent days, the reduction in shipping is significant and day by day the situation gets worse.

Everyday around the globe the 100 million barrels are consumed, with 14 million of these only in China. At the begging of the 2020, the IEA (Institute of Economic Affairs) predicted a demand’s growth in the order of 1 million of barrels, with half going to China, during 2020.

Unexpectedly now the situation is completely different.

In China, Japan and South Korea the governments informed the population to avoid every kind of travel in order to limit contact and the spreading of the virus, reducing as consequence the use of oil.

In china the oil demand has reduced by 1/3 compared to the previous three months. 1,5 million of bpd less than February 2019. From these data is obvious that, for the first quarterly of 2020, the consumption of oil will be less or equal to last year.

As consequence the oil’s worth lost around 1/5 of its original price, arriving yesterday at 52 dollar per barrel. The experts forecast that at the end of the 2020, the major nations will appropriate a budget for oil, which will be calculated based on 42 dollars per barrel.

The global increase will pass from the 2,9% (now) to the 2,4% at the end of the year.

For this reason, on the 5th and 6th March in Vienna, OPEC+ (Organization of the Petroleum Exporting Countries) will hold a meeting of the discuss crude’s future. The OPEC+ is made up by the 13 countries major exporters of crude plus their “allies” Russia and Mexico and together they represent 1/3 of the oil’s offering in the world.

Apparently the only solution is to reduce the production of oil, as expected by the “Reduction Deal” accepted by the OPEC+ assembly in 2017, but many members seem to be against. In practice it debates to decrease the number of barrels under the current figure of 1.7 million pd, in order to support the price, as already happened in November 2018 when, the limit recognized, was 1.2 million bpd. Meanwhile, as the organisation waits to gather, Saudi Arabia, one of the members states of OPEC+, has already made its decision: reducing crude supplies to China in March by at least 500,000 bpd.

Bpd=ballers per day

Written by Nicolas Spirito