The Covid-19 crisis and geopolitics have sharply affected demand for transport of crude oil. However,
the commodity will be in demand for many more years, despite the plethora of initiatives taken to combat climate change and the high degree of uncertainty that is testing the industry as never before.
In its latest weekly report London-based Gibson Shipbrokers Ltd said that how demand will change around the world will depend on a variety of factors.
“Currently, ‘oil majors’ actually only hold around 12% of oil reserves, this compares to around 66% of the worlds petroleum supplies are in the hands of National Oil Companies (NOCs) such as Saudi Arabia’s Aramco, Russia’s Rosneft or Mexico’s Pemex. Other independent oil companies take the remaining 22%. This means that even if the oil majors commit to become cleaner ‘energy’ companies, their influence is smaller than in the past”.
“So, it would seem that NOCs will have a far bigger role in influencing future supply. For states that rely heavily on oil, it would appear there is little incentive to cut production. With peak demand somewhere on the horizon, there may actually be an incentive to produce more oil; it may be better to sell the resource at a lower price now than leave it in the ground. Carbon Capture may be a way for NOCs to continue producing hydrocarbons to offset their future carbon emissions”, Gibson
The shipbroker added that “there is also going to be the question of need. Even if the world managed to electrify car and train transport, it’s going to be an awful lot harder to power ships (and planes) with anything other than oil products. Similarly, there are the massive plastics, chemical, fertiliser and textiles industries that depend on products derived from oil. So, the overall ‘greening’ of the global economy currently seems to focus on the easiest parts to green, those of the power and transport sectors. A combination of renewable energy and electric vehicles means that oil is facing competition in the transport and industrial markets – something that has never really happened before”.
“Oil has made the modern world in which we live, finding a replacement for the black gold and the many things that it can provide will be a hard-won process. That process now seems to be gaining momentum, but, despite all this, direct replacements will be at least a generation away. Meaning that there will be continued demand for oil, product, and chemical tankers for decades to come, even if the industry has to live with easing absolute demand at some point”, the 125-year-old company concluded in its tanker report titled “The Future of Black Gold.”
-Gibson Shipbrokers is the first UK shipbroker to become a fully independent, employee owned company, run on behalf of, and for the benefit of all worldwide employees of the company.