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China likely to dominate 2023 oil demand growth: MSI

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SHANGHAI : Tanker markets have performed well over the first two months of the year, with sharp increases in spot earnings in both the crude and products sectors, according to Maritime Strategies International (MSI).

In its most recent Horizon report, however, the analysts predict continuing volatility across tanker markets as global trade patterns are reformed in the wake of war in Europe and China’s reopening.

MSI expects Asia, and China in particular, to underpin oil demand growth this year although overall cargo volumes look likely to be relatively restricted despite distance-driven gains, the firm said. Chinese consumption of transport fuel is climbing as the Chinese start travelling again, and MSI expects demand for jet/kerosene to rise sharply as widescale flying activity resumes.

China’s consumption of Middle East crude has dipped as the country takes more Urals crude from Russia and US-sourced barrels, according to MSI data. Europe, meanwhile, is likely to consume more oil and products from the Middle East, the US and Asia, further underpinning tanker spot earnings in the wake of Europe’s ban on Russian products imports by sea. 

MSI Director, Tim Smith, commented: “From the current perspective, the tanker market is good place to be and although we remain positive, some cooling off in both earnings and asset prices remains a feature of our forecast across 2023. Lower deliveries in the larger crude sectors may also help support market dynamics in 2023. Scrapping activity remains relatively elusive, given both high demand for older tonnage and strong freight markets.

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