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Tight Q3 Crude Balance as Tanker Rates Driven by China Import Quotas: FGE

OIL

A tight crude balance is expected in Q3 as a recent rally in tanker rates has been driven by the larger than expected third batch of crude import quotas from China for 2023 according to FGE.

  • The industry initially feared the OPEC cuts would result in less demand for oil tankers, but the higher China quotas could increase tanker distances.
  • “The freight market is now likely pricing in the need for these higher quotas as needing to be filled with volumes from further afield than the Middle East, i.e. the Atlantic Basin and more likely the US” said FGE.
  • They see stronger time spreads with large stock draws to meet domestic demand if US crude exports surge in July as shipping fixtures suggest.
  • Crude balances are “looking extremely tight” for Q3 2023 and “crude prices in the Atlantic Basin do not yet reflect the supply-demand deficit we are anticipating.”
Energy BulletsCommodities
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