Whether Omicron is a black swan and a source of concern regarding the expected upswing in the tanker industry is too early to say, a number of tanker companies tell ShippingWatch. More data is needed for them to figure out what they are dealing with and if the latest mutation has the potential to undermine or postpone the global economic recovery which tanker carriers are betting heavily on after months of depression.
Both crude carrier Euronav and product tanker operator Hafnia tell ShippingWatch that they need more data and information to conclude anything about the potential impact of Omicron.
At Frontline's headquarters in Oslo, Chief Executive Lars Barstad, who has previously told ShippingWatch that he expects an upturn in the tanker market to hit soon, sees Omicron as something that potentially could affect the recovery, but whether it will is something nobody will know until a few weeks have passed.
Can Omicron affect the recovery you have been waiting for?
"Yes, it can, but we now actually see that scrapping of older ships is accelerating, which has a positive effect on vessel supply in the market. If you read a little about Omicron, from those who have first-hand knowledge of South Africa, there is a possibility that this mutation is not as bad as feared, too. However, we will not know completely until a few weeks from now."
No sustained recovery before late next year
Omicron is being kept an eye on in the analyst corner of the shipping world as well.
Burak Cetinok, head of Research at Arrow Shipbroking Group tells ShippingWatch that he is cautious about the timing of the recovery and that he does not expect the market to experience a sustained recovery until late next year if not later.
So how big an effect on the upturn Omicron could have, he is unsure about. It is simply too early to tell. But could it turn the market more sour right now? It could.
"Whether the recent outbreak or the new strain of Covid changes our outlook? Potentially, yes. I think its immediate impact could be on the OPEC+ decision on production increases. Given the sharp drop in oil prices, and the uncertainty caused by the new strain, OPEC+ will probably pause supply increases in the coming months. And that is key to a tanker market recovery because oil demand has been recovering quite nicely so far," he says, before adding:
"But supply has been lagging, mainly because demand has been met by supplies from inventories. So if the output hasn't increased [...] it will probably delay the recovery even further."
On Thursday, OPEC+ announced that the organization will maintain the planned oil supply. However, the organization added that it could change its decision at short notice, Marketwire writes on Friday.
Oil extends gains after OPEC+ takes flexible stance on supply
Way too soon
However, Cetinok, like the others, recognizes that it is way too early to paint a complete picture of the situation just yet.
But one thing he knows, it definitely won't help the situation.
"I think this is bearish news for the tanker market in the short term. But does that change our longer term outlook? No, not really. I mean, we were not really expecting a material improvement in the tanker market, at least, until late next year anyway. So it doesn't really change our longer term outlook materially," he says.
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