Analyst S+P Global Platts reports that following DHT and Scorpio, a third tanker operator International Seaways is postponing scrubber installations.
Three of the owner’s 10 VLCC scrubber installations have been delayed to align with the next natural dry docking days for these ships in 2021, as the company expects a bullish second- and third-quarter tanker market due to excessive crude supply and the resulting need for seaborne storage of oil and products, President and CEO Lois Zabrocky said last week.
During the company’s first-quarter earnings call, Zabrocky said “excess production continues the need for tankers to be used as floating storage, and, coupled with increased delays offloading cargoes as shore-based storage fills up, has supported a robust tanker rate environment.”
Bullish tanker markets resulting from a supply/demand imbalance caused by global overproduction against the backdrop of pandemic demand destruction is another economic element having tanker owners rethink their scrubber installation schedules, as widening contagoes on the oil markets essentially pay for growing floating storage demand, in turn boosting tanker freight rates.
OPEC expects global oil pandemic demand destruction of 6.8 million b/d year on year in 2020 to 92.82 million b/d, with April seeing the largest downturn at about 20 million b/d, according to its latest monthly oil market report. The International Energy Agency sees demand reduced by 29 million b/d in April and 9.3 million b/d for the entire year, compared with a 10.7 million OPEC+ production curb for May and June.