The Crude Tanker Market: What happened?

By Tom Weibell, Projects and Ship Finance with Dietze & Associates, L.L.C.

This article aims to explain what happened to the crude tanker market1 in the year 2000 and what we can look forward to in the next four years, always keeping in mind only a fool would believe the tanker market is predictable.

A Brief Historical Summary
December of 1999: Aframax owners were willing to fix 1 year at 12,000 USD per day. Suezmax new buildings were making 15,000 USD per day, roughly the same as their 25-year-older sisters. The difference in earnings between old and new was mainly due to the higher fuel consumption of the older ships. Brand new VLCC’s with a delivered cost of about 85 million USD were fixing five years at break-even of capital cost around 30,000 USD per day leaving a return on equity close to or below 10-year treasuries. The VLCC spot rates were below 20,000 USD per day. Not a good scenario for investors.

This is only an excerpt of The Crude Tanker Market: What happened?

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.