Operators of very large crude carriers (VLCCs) and ultralarge crude carriers (ULCCs) will be hit in the near term by continued fleet expansion and lower demand in Asia.
Ocean Shipping Consultants Ltd. (OSC), Chertsey, U.K., estimates that vessels more than 20 years old comprise 45% of the global fleet of VLCCs (200,000-300,000 dwt) and ULCCs (300,000 dwt). While many of the single-hulled tankers may be culled from the fleet as they approach their 25-year service inspection, OSC said 89 VLCCs and ULCCs with combined capacity of 26 million dwt, equivalent to more than 20% of sector capacity, were being built or on order at the beginning of 1999.
"Owners' and charterers' policies towards the 1970s-built VLCCs-capable of trading through to 30 years old-remain a key determinant of forward supply," said OSC. It expects Asian oil consumption to remain the focus of near-term VLCC and ULCC marketing efforts, with growth in China and India contrasting with sharp cutbacks in Indonesia, Thailand, and Japan: "Overall, Asian oil demand is set to expand over the near term at about 2.5%/year, albeit at much lower growth rates than in the early 1990s." OSC's base case profiles a rise in world oil demand growth from just more than 2%/year in 1999-2000 and to 2.3-2.5%/year over the medium to long term, lifting consumption from 3.394 billion metric tons in 1997 to 4.525 billion tons by 2010.
The analyst estimated 1998 global crude oil trade volumes at 1.536 billion metric tons, up 2.4% from 1997. In 2000, OSC expects global trade to reach 1.626 billion tons.
During 2000-05, said OSC, a strong recovery in Asian oil demand is expected to bolster crude oil trade, supported by increased shipments to the U.S. and Northwest Europe. Overall trade is set to rise by less than 200 million tons to 1.825 billion tons. Shipments to Asia are expected to account for more than half the rise in crude trade during 2000-05. Middle East exports are expected to rise by 145 million tons during that time. During 2005-10, continued economic recovery in Asia is expected to raise Middle East oil exports by 205 million tons/year, taking annual traded volumes to 2.05 billion tons/year.
By 2010, the Middle East is expected to account for 56% of global crude oil exports, up from 49% in 1996.
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