NAP Gives Crude Tanker Outlook in 4Q17 Conference Call
In the 4Q17 conference call, Navios Maritime Midstream Partners (NAP) offered key insights into the crude tanker industry outlook. In this part of the series, we’ll take a look at Navios Maritime Midstream Partners’ views on oil consumption, ton-mile demand, US crude oil exports, and its impact on the crude tanker industry. An analysis of these factors will help us analyze the outlook for NAP as well as peers Euronav (EURN), Teekay Tankers (TNK), Tsakos Energy Navigation (TNP), and DHT Holdings (DHT).
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In the past 30 years, crude oil consumption has generally grown except for in 2008 and 2009 due to the financial crisis. Going forward, crude oil consumption’s main growth drivers will likely be the increasing demand from the Asian economies, particularly China and India. The IMF (International Monetary Fund) has projected global GDP growth for 2018 and 2019 at 3.9% for each year. The IMF has increased its growth forecast for this year and 2019 due to the global growth momentum as well as the expected impact of the recently approved tax policy changes in the US.
According to Navios Maritime Midstream Partners, moving crude oil on ships from West Africa and South America to China needs as many VLCCs as the movement from the Arabian Gulf, even though the Arabian Gulf shipped about two times more oil to China. More crude oil from the Atlantic Basin was transported to China in 2017, which created additional demand of 31 VLCCs based on a 90-day round trip. In the first ten months of 2017, the US exported 7.3 million barrels of oil per month to China and 2.5 million barrels per month to Japan and Korea. New crude export streams from West Africa, Brazil, and other Atlantic Basin suppliers to new refineries in the Eastern Hemisphere help increase ton miles and support VLCC rates.
NAP believes that this trend should continue going forward, as Chinese domestic oil production falls and consumption increases.