A Product Tanker Investment Hypothesis, Overextended

Today’s release of the long-awaited Medium-term Oil Market Report (MTOMR) by the International Energy Agency (IEA) featured a more relaxed oil market forecast for the next five years — driven by weaker global demand growth, stronger North American supply and rising Iraqi production capacity. The agency went to great lengths to dramatise a “deeply transformed” global oil map, as a rebalancing of regional supply and demand would drive crude trade flows lower, but boost longer-haul product movements. Of course, the market has embraced this product tanker investment hypothesis for years, and the fundamentals remain still intact, so this is hardly new news. Still, the IEA’s assertion that China would become a “new powerhouse in product exports” may be a fanciful overextension of this hypothesis. Download here