Low Oil Prices are "Positive for the World Tanker Business"

The recent drop in oil prices means low bunker prices and an increase in oil demand, says Nordic American Tankers.

Low oil prices are a boon for the tanker market, having raised the demand of oil and lowered bunker costs, according to Bermuda-headquartered Nordic American Tankers Ltd. (NAT).

The company, which owns 22 Suezmax tankers, said that the current Suezmax tanker market is strong and looking well going into the fourth quarter of 2014. 

"We see in the shipping market that volumes of oil being transported are increasing," said CEO Herbjørn Hansson.

"This increases the worldwide demand for Suezmax tankers, which is positive for our business."

Declining oil prices have also led to low bunker costs, with Nordic noting that recently bunker prices have dropped as much as $200 per tonne.

"By far our largest cost item is the bunker fuel that the ships are burning in the main engines," said NAT.

"Our 22 vessels typically burn about 40-50 tons of fuel per day each depending upon the speed of the vessel. Recently bunker prices have dropped to around $450 per ton, decreasing our cost base. This is also positive for our business."

Hansson also pointed to the effects of a $20 saving per barrel of oil, which translates to an annual savings of $55 billion for the U.S.

"I wish to make it clear that a lower oil price is contributing positively to our business beyond the effects of changing trade patterns and constrained Suezmax tanker supply growth," he said. 

As the global Suezmax fleet is not expected to grow and may even shrink over the next few years, according to Hansson, improved rates and higher fleet utilization are expected to continue in the near-term. 

Tanker rates were first predicted to improve in the second half of this year earlier this summer.