The European Union’s ban on Russian fuel imports is likely to actually increase the world’s need for oil tankers, according to vessel owner Torm A/S.
Seaborne arrivals of crude from Russia into the EU will be outlawed from early December, and imports of diesel, jet fuel and other oil products will be banned a couple of months after. That means the region will have to bring in replacement supplies from farther away, while Russian barrels will also have to find new homes.
“The EU ban on Russian oil products from February 2023 will spark a recalibration of the oil trade ecosystem,” Torm said in a statement. “Some of this trade recalibration has already started.”
The company estimates the reshuffling of oil products trade will cause a 7% jump in ton-miles, the shipping industry’s key demand measure because it captures the two things that occupy vessels — the amount of cargo and how far it gets transported. Freight rates for hauling refined fuels have already soared since the start of the year, Baltic Exchange data show.
Europe will need to import oil products, mainly diesel, from regions such as the US, Middle East, India and other Asian countries. Russian diesel exports will also have to find new customers, presumably in places like Latin America, Africa and Turkey, while some may potentially also go to Asia, Torm said.
“We expect further support to the product tanker trade from the need to replenish both commercial and strategic oil inventories in many countries,” it said.
Tanker demand is also being supported by refinery closures in importing regions — partly due to the green energy transition and the hit from the Covid pandemic — and new capacity being built in exporters. Torm said it has seen a big jump in imports from Australia, New Zealand and South Africa, where refineries recently closed, and expects the general trend to continue.
Torm says it has a wholly owned fleet of more than 80 vessels for moving energy and clean petroleum products. The company said earlier this year it wouldn’t enter into any new business involving Russian port calls for the time being.