2024.11.05

[SLOW] Daily VLCC Market _ VLCC TCE comparison by routes

Tanker rates drop as OPEC+ delays production increase

OPEC+ has delayed its planned crude oil production increase of 180,000 barrels per day until the end of December, citing weak demand and low prices. The production boost, initially expected to support crude tanker rates, has now been postponed twice due to economic uncertainties, especially with soft Chinese demand. Analysts from Fearnleys Securities and Jefferies noted that although oil prices rose slightly on Monday, the broader market outlook remains cautious. Non-OPEC+ production is set to increase in early 2025, potentially limiting any further production hikes from the cartel. The tanker market responded to the delay with falling rates across segments: VLCC rates on the Middle East-China route dropped by 12% to $27,419 per day, suezmax rates fell by 3%, and aframax rates plummeted by 17%.

[SLOW] Oil Market _ Benchmarks

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China's refining output declines amid weak margins and sluggish demand

Chinese refiners are scaling back fuel output due to low profit margins and weak fuel demand, a trend expected to continue into early 2025 despite seasonal increases in consumption. Major refiners have cut production rates as economic slowdown, the rise of electric vehicles, and cheaper LNG alternatives reduce transport fuel demand. Consultancy Rystad Energy revised China’s fourth-quarter refining throughput forecast down to 14.7 million barrels per day (bpd), while Vortexa anticipates a 5% year-on-year drop. The country's import levels are also projected to fall, with a forecast of 10.66 million bpd for the fourth quarter. Profit margins for state-owned Sinopec and independent "teapot" refiners are particularly strained, with government restrictions on crude imports compounding difficulties. Petrochemical margins have also weakened due to oversupply, contributing further to the reduced refining output.

[SLOW] https://slowspace.io/ Trade Flow China seaborne crude imports by origin countries

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Saudi investment to boost Vietnam’s refining capacity and VLCC trade

Saudi Aramco’s new collaboration with PetroVietnam and a $720 million investment from Australian firms are set to expand Vietnam's oil refining industry, aiming to increase self-sufficiency in oil product supply. Currently operating two refineries with a combined capacity of 350,000 barrels per day (bpd), Vietnam still imports 280,000 bpd, primarily from regional suppliers. The potential Saudi investment aligns with Saudi Arabia’s strategy of securing demand for its crude by supporting downstream facilities abroad. If the agreement proceeds, Saudi Arabia could secure a long-term supply arrangement similar to Kuwait’s deal with Nghi Son refinery, utilizing VLCCs to transport crude. Increased domestic refining capacity would likely reduce Vietnam’s imports of refined products, impacting employment opportunities for smaller tankers, including MR and handysize carriers, in the Pacific region.

[SLOW] https://slowspace.io/ Nghi Son Refinery Cargo Flow

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Houthi attacks on shipping routes cost Egypt’s Suez Canal $6 billion in revenue

Egypt’s Suez Canal revenues have dropped sharply as vessels reroute to avoid attacks from Yemen's Houthi rebels, resulting in an estimated $6 billion revenue loss. According to Egypt’s foreign minister, Badr Abdel Aati, Suez Canal traffic has declined by 70%, with container ships, LNG carriers, and other vessels reducing their transits by over 90%. The Houthi group, which began targeting Red Sea shipping in response to the Gaza conflict, has attacked over 100 ships since last November. The Houthis have expanded their blockade, pledging to target vessels linked to Israel and circumventing attempts to avoid restrictions through changes in vessel ownership or registration. This blockade not only affects Israeli assets but also ships merely trading with Israeli-linked interests, significantly impacting Suez Canal crossings.

[SLOW] Tanker Canal Traffic Monitor _ Suez Canal weekly ship count - 1 year

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Tanker-Bulker collision in Gibraltar strait leads to paraffin spill, investigation underway

A collision between the Japanese tanker Southern Puma and the Swiss/German bulk carrier Louisa Bolten in the Strait of Gibraltar has caused a spill of approximately 500 cubic meters of paraffin. The accident occurred 20 miles off Punta Europa early on Friday. While no visible pollution was observed in the area on Saturday, Southern Puma sustained hull damage and is docked in Algeciras for assessment and repairs. The paraffin cargo must be offloaded onto another vessel before repairs begin. The Louisa Bolten, with only minor bow damage, was cleared to continue its voyage to Turkey. No injuries were reported, and an investigation is underway to determine the cause of the incident.

[SLOW] https://slowspace.io/ Satellite Strait of Gibraltar

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Abu Dhabi partners with Microsoft on AI to boost efficiency in energy sector

Abu Dhabi National Oil Co. (ADNOC) has partnered with AIQ, Microsoft, and G42 to introduce "agentic AI" into the energy industry, aiming to streamline operations and reduce emissions. This AI system will enhance operational efficiency, including accelerating seismic survey timelines from months to days and improving production forecast accuracy by up to 90%, according to CEO Sultan Al Jaber. The AI system will begin testing by year-end, utilizing G42’s Khazna data center, which is transitioning to renewable energy. Microsoft and G42 recently expanded their collaboration with a $1.5 billion investment in AI centers in Abu Dhabi, positioning G42 as a leading AI player in the Middle East.