By Lambros Karageorgos
Shipping analysts assessed that this week’s decision by OPEC members to reduce daily crude oil production by 1.2 million barrels is “neutral” for global ocean-going shipping.
Tsakos Energy Navigation (TEN), which manages 65 tankers, as well as Norway’s Frontline, with 55 tankers, predicted that the decision will have few repercussions for the tanker sector.
Frontline’s Robert Macleod told Lloydslist this week that the sector will be unaffected because the volume of crude already pumped still needs transport, despite the production decrease.
On his part, Tsakos COO Giorgos Saroglou told “N”, on the occasion of the release of the company’s results, that the decision appears “neutral” for crude shipments, especially since production was at an all-time high over the recent period.
OPEC members were pumping out a record-high 33.8 million barrels a day before the agreement to slash production.
Another unpredictable factor is whether OPEC member-states will actually implement the agreement, as past practice has shown compliance rates of between 50 to 60 percent.
The NYSE-listed Tsakos group (TEN) nevertheless expressed optimism over future turnover despite the significant decrease in profits in the third quarter of 2016.
In a teleconference meeting with investors, and after the results were announced, TEN president and managing director Nikos Tsakos said the results were negatively affected by an almost total suspension of Nigerian production, due conflict in the country, as well as to the expected seasonal downturn in consumption.
However, he said results should pick up in Q4 with Nigeria’s resumption of production and the advent of winter in the northern hemisphere.
Additionally, shipping rates for VLCCs and smaller tankers are moving up, another factor in forecasts for improved Q4 2016 and Q1 2017 results.
Rates for VLCCs again exceed 50,000 USD per Diem, whereas for Suezmax vessels the rate is around 38,000; 33K for Aframax.