Rates may spike as vessel availability tightens

This week, OPEC+ announced a further increase in oil production of 411,000 barrels per day (bpd), effective from June onwards. This follows a similar rise in May. With a total supply boost of 960,000 bpd between April and June, the group has now reversed about 44% of its earlier 2.2 million bpd cut.

Why this volume increase benefits shipping rates

• Lift seaborne crude volumes in the near term
• Support tanker demand across key export regions, particularly the Middle East
• Potentially extend the strong freight environment into the summer months
  
  

If production continues to rise into July, the trend could further tighten vessel availability and improve earnings, especially for VLCCs and Suezmaxes trading on long-haul routes.

Could cuts be rolled back entirely this year?
Goldman trader Gerald Tan writes in a note that the OPEC decision coincides with “rising geopolitical tensions in the Middle East following a Houthi missile strike on Israel’s main airport.”

According to Reuters, OPEC+ may unwind its total 2,2 mbpd voluntary cut as early as November, which will benefit the tanker market as more crude comes onto the market.