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Demand for tankers explodes, all due to the chaos of US and EU tariffs on Russia

With global trade disrupted by sanctions on Russia, while Asia and the Middle East increase refining capacity at the expense of the United States and Europe, orders for fuel tankers have soared to an all-time high this year levels of the last ten years. Since the normal pipelines between Russia and the EU are almost closed, oil products travel, and a lot, by ship.

A total of 38 medium-range tankers were ordered in 2023, the most since 2013, according to data from ship operator Braemar cited by Bloomberg.

The new global trade order after the EU and G7 embargoes and price caps on Russian petroleum products, as well as the increase in Asian and Middle Eastern refining capacity in the face of plant closures in the US and Europe, have created a wider geographical dislocation between the new refining capacity and the main consumption centres. Producers, refiners and consumers of petroleum products are further away, petroleum and its derivatives have to go further. This commits more ships and therefore it takes more of them to meet the needs.

Prior to the EU ban on Russian petroleum products, Russia began diverting its cargoes of petroleum products to North Africa and Asia. At the same time, Europe has begun buying more diesel and other fuels from the Middle East, Asia and North America to replace lost Russian barrels.

Using ship-to-ship cargoes (STS), Russia is shortening oil tanker routes to Africa and Asia, as Moscow is now banned from exporting fuels to the EU. At the same time, Europe is ramping up imports of diesel from the Middle East and Asia to compensate for the loss of Russian barrels, of which it imported about 600,000 barrels per day (bpd) before the embargo went into effect on 5 February.

This dislocation of the global fuel trade, with the longer distances tankers have to travel to deliver Russian petroleum products outside of Europe, increases the demand for tankers to transport petroleum products.

In addition, global refining capacity is expected to increase by nearly 3 million bpd by the end of 2023, when at least nine refinery projects are expected to start up in the Middle East and Asia, according to EIA estimates last year.

“The major structural change in the refinery landscape that will support demand for refined product transportation over the medium to long term is the geographic dislocation between new refineries and major consumers,” Alexandra Alatari, senior analyst at Braemar, told Bloomberg.


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The article Demand for tankers explodes, all for the chaos of US and EU tariffs on Russia comes from Economic Scenarios .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/scoppia-la-domanda-di-petroliere-il-tutto-per-il-caos-dei-dazi-usa-e-ue-alla-russia/ on Sun, 02 Apr 2023 15:45:59 +0000.