The demand for oil tankers transporting fuel is about to reach new demand highs—potentially driving fuel prices up.
- Oil tankers that haul fuels like gasoline and diesel are about to see some of the highest levels of demand in the last three decades.
- Disruption of Russian oil distribution has resulted in the tankers traveling greater distances to deliver cargo.
- Ton miles—the volume of cargo multiplied by the distance it travels—will see a 9.5% jump next year.
- This increase will be the largest for tankers since 1993.
Why it’s news
More sanctions on Russian oil are set to go into place in February, leaving oil tankers to pick up the slack and travel greater distances.
The ships may also be taking on a greater volume of cargo as oil refineries in Asia and the Middle East are expected to up their production.
In some cases, tankers will need to travel five or six times their typical distance, leading to a greater number of ships needed to transport the same level of cargo.
This will likely result in a higher demand for oil tankers themselves. The market for the ships is already at high levels of demand. The fees to hire a medium-sized tanker have reached the highest levels since 2008, Bloomberg reports.
Backing up a bit
Many European countries may have issued sanctions against Russian oil, but that doesn’t mean these countries are completely free from Russian influence.
Certain energy imports from Russia to Europe have increased. Sanctions were issued against natural gas through the Nord Stream pipeline, however liquefied natural gas (LNG) imported to Europe increased 46%.
This continued dependence on Russian energy makes Europe vulnerable to demands from Russia as winter falls over the continent and energy needs rise.
From January to September, 16.5 billion cubic meters of Russian LNG were imported to Europe—an increase from 11.3 billion last year, Politico reports.
Europe’s previous imports of pipeline gas were around 105.7 billion cubic meters. However, after sanctions and actions from Russia, that has dropped to 54.2 billion. While the increase in LNG imports is small in comparison, the move seems contradictory to Europe’s previous commitments to cut off Russian points of revenue.
Russian LNG has predominantly been imported to France, the Netherlands, Spain, and Belgium this year. France is the largest buyer followed by Spain.