“Three Speed” Economic Environment Batters Europe

The “three speed” recovery – a phrase of choice of the IMF – refers to varying rates of economic growth in emerging markets, the United States, and demographically-challenged areas such as Europe and Japan. Emerging market economic growth has been the saving grace of tanker demand in severely overbuilt crude tanker sectors. The economic rebound in the United States is partially credited to extraordinary growth in crude oil production that, while initially negative for tanker demand, has not been all bad news as it has pushed volume to emerging longer-haul trade lanes. Even Japan showed a monetary policy-induced mirage of growth in the last quarter. Europe, on the other hand, continues to lag behind, and Eurozone optimists were disappointed earlier this week when the region reportedly entered the longest recession of the European Union’s existence. The challenges faced by European refineries have been documented recently in this space (see 12 April 2013 Opinion), and their predicament has worsened as the Brent benchmark has strengthened in the meantime. Download here