Overview of Issues related to
International Shipping
Module 008
Capt Sarabjit Butalia MSc FNI IMOMA
9th May 2020
butaliasarabjit@gmail.com
GLOBAL ENERGY MAP
PART VI
Undated handout archive photo by the Norwegian
shipowner Frontline of the crude oil tanker Front
Altair, released June 13, 2019
Oil Surges After Attacks on Tankers
in Gulf of Oman
• Oil prices jumped more than 4% on Thursday
after a suspected attack on two tankers in the
Gulf of Oman near Iran and the Strait of
Hormuz, through which a fifth of global oil
consumption passes.
• As of 26th June Brent futures traded at about
$64.30..
Oil Surges After Attacks on Tankers
in Gulf of Oman
• The Marshall Islands-flagged Front Altair carrying
naphtha and the Panama-flagged Kokuka Courageous
carrying methanol have been evacuated and the
crews are safe.
• The charterer of the former said the vessel was
“suspected of being hit by a torpedo.” Its owner said
it was on fire. The manager of the latter said it had
been damaged as a result of a “suspected attack” but
that its cargo was intact.
Oil Surges After Attacks on Tankers
in Gulf of Oman
• Brent crude futures were up $2.19, or 3.65%, at $62.16 a
barrel by 1341 GMT, having risen as much as 4.45% to $62.64.
• U.S. West Texas Intermediate crude futures were up $1.79, or
3.5%, at $52.93 a barrel. WTI earlier rose as much as 4.5% to
$53.45.
• “This is a fairly small increase given the uncertainty and the
potential knock-on effects of attacks such as these. This
partially reflects the fact that the oil market has already priced
in the supply and geopolitical risks emanating from Iran,” said
Cailin Birch, economist at The Economist Intelligence Unit.
What has changed, and in dramatic fashion, is
America’s relationship with the global oil trade in
general.
The shale boom has transformed Washington’s
attitude toward energy. Far from fretting about
being “addicted to oil,” as President George W.
Bush put it in 2006, the Trump administration
sees America leapfrogging the old obsession
with energy independence straight to the dream
of “energy dominance.
Persian Gulf War Risk Premiums Seen Costing $500,000
Per Oil Shipment
• Underwriters are now aiming to charge
anywhere from $150,000 to $325,000 to cover
a cargo valued at $130 million, the people
familiar with that market said. Until this week,
the same cover cost $1,000 or less. Insuring
the tanker itself now costs in excess of
$200,000, based on a $75 million vessel.
That’s up from less than $30,000 at the start
of 2019.
GLOBAL ENERGY MAP
• The energy map of the world is being redrawn and
the global geopolitical order is adrift in consequence.
We are moving away from a world dominated by a
few energy mega-suppliers, such as Russia, Saudi
Arabia, and Venezuela, and toward one in which
most countries have some domestic resources to
meet their energy needs and can import the balance
from suppliers in their own neighbourhood
GLOBAL ENERGY MAP
• Within the next five to ten years, regimes that
are dependent on energy exports will see their
power diminished. No longer able to raise
massive sums from energy sales to distribute
patronage and project power abroad, they will
have to tax their citizens.
Global Energy Map
• The global energy map is being redrawn amid,
in particular, a rise in oil and gas production in
the United States, reports of new finds of
mineral resources in various regions (for
example, East Africa and the Mediterranean),
as well as advances in extraction technology.
Global Energy Map
• The recent surge in the shale oil and gas
production in the United States – the largest
world oil consumer – is probably the single
most game-changing trend, with implications
extending beyond national borders and having
a strong bearing on tanker trade
Global Energy Map
• The International Energy Agency expects the
United States to become a net exporter of
natural gas by 2020 and to overtake Saudi
Arabia as the largest global oil producer by the
same year, before becoming nearly self-
sufficient in energy by 2035 (International
Energy Agency, 2012).
Global Energy Map
• Looking ahead, this may result in a new world
energy map, with fewer crude volumes traded
internationally, more refined products
exported from the United States, and China
and India potentially emerging as large
importers of crude oil and exporters of refined
petroleum products
Global Energy Map
Factors, Mainly Relating To Oil Demand & Its
Impact on Tanker Market
• 1.Changes in consumption patterns are taking
place in the global oil market as energy
efficiency and clean transport programmes
are being adopted in most OECD countries
and many developing countries
Factors, Mainly Relating To Oil Demand & Its
Impact on Tanker Market
• 2. The United States, a major oil consumer, is
predicted to become the world’s largest oil
producer by 2020.
Factors, Mainly Relating To Oil Demand & Its
Impact on Tanker Market
• 3. Refineries are moving from the West to the
East, with the closure of refineries in the
United States and Europe and the growth of
Indian, Chinese and Middle Eastern refineries
Factors, Mainly Relating To Oil Demand & Its
Impact on Tanker Market
• 4. Arctic routes are being opened up (North
West and North East passages) and the
Panama Canal is being widened and is
expected to be opened to Suezmaxes in 2015
Factors, Mainly Relating To Oil Demand & Its
Impact on Tanker Market
• 4. Arctic routes are being opened up (North
West and North East passages) and the
Panama Canal is being widened and is
expected to be opened to Suezmaxes in 2015
THANKYOU
