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Any Oil Production Freeze Will Have Limited Near-Term Impact on Tanker Markets: Teekay
Teekay Corporation (Teekay) has joined the chorus of voices proclaiming that the upcoming meeting of the Organization of Petroleum Exporting Counties (OPEC) and non-OPEC producers on April 17 in Doha will likely fail to result in an oil production freeze, but even if it does, it will be inconsequential for the tanker markets in the near term.
Writing in its latest Tanker Insights blog, Teekay says a production cap is unlikely to be reached because - as previously reported by Ship & Bunker - Saudi Arabia says it will only will agree to a freeze if Iran and other major producers also do, while Iran says the idea that it will participate in a freeze is "ridiculous."
"Any agreement which fails to include Saudi Arabia and Iran – the only two countries that have any meaningful spare production capacity – would essentially be meaningless," said Teekay.
Nevertheless, in considering what impact a potential production freeze would have on the crude tanker market, the company notes that the sector is currently enjoying the result of the "perfect storm" of massive oversupply and a surge in consumption that began in 2014.
"Even if a production freeze agreement is reached, it is not necessarily negative for tanker demand in the near-term. Russia and most of OPEC are already producing at record high levels, which means that the crude tanker market should remain well supported until oil demand catches up with supply and oil prices begin to push higher," says Teekay.
"Even then, the rebalancing of oil prices is likely to take time, meaning that the crude tanker market should remain well-supported through the remainder of 2016."
In August of 2015 Ship & Bunker reported that the oil glut had helped Teekay report record quarterly profits.
