The chief executive of shipping company Frontline expects the tanker market to face a difficult winter.
The fourth quater is usually the peak season for tanker vessels, but there Robert Hvide Macleod predicts there will be less demand this year.
"For the first time since I started at Frontline, the second half-year will be weaker than the first half-year. Long-term, we're well-positioned, but short-term things are looking more uncertain than ever," he writes in an email to Norwegian media E24.
Last week, Frontline presented its interim report for the first half of the year, showing the best result in more than 10 years. In the second quarter alone, the stock-listed company earned nearly USD 200 million on the bottom line.
For the first time since I started at Frontline, the second half-year will be weaker than the first half-year.
The strong market is in part down to a tightening of supply, as vessels have been used for floating storage. Congestion in Chinese ports in the wake of the coronavirus crisis also means that ships have been idle.
As the oil aboard those vessels is sold and delays start to subside, more vessels will slowly start to rejoin the market, putting pressure on rates during winter, assesses shipping analyst Joakim Hannisdahl from Cleaves Securities in a comment to E24.
Meanwhile, the Opec+ countries have agreed to keep production stable, thus lowering demand for freighting oil.
Cleaves Securities estimates that day rates for a VLCC ship currently sit around USD 10,000. This figure could increase to USD 20,000-30,000 per day during winter, which is relatively low compared to the usual levels during peak season.
English Edit: Ida Jacobsen