Oil Price Drop, March 9th 2020: What It Meant for the Dirty Tanker Freight Market
On March 9, 2020, oil prices collapsed — and the dirty tanker freight market responded almost immediately. Signal Ocean tracked the knock-on effects across VLCC supply, fixture activity, and freight rates in real time.
Just two days after the price drop, on March 11, 2020, an unusually large number of VLCCs went "On Subs" — placed under contract and withdrawn from available supply. The speed of that shift illustrates how quickly oil price moves translate into tanker market volatility.
Data fromSignal Maritimeas analysed by TheSignal OceanPlatform
Signal Ocean data showed two to three times the normal daily fixture count. The fixtures were designed for voyages loading in the Arabian Gulf and going for the Far East, as well as for oil storage. This increased fixture activity immediately impacted vessel supply and freight pricing for VLCCs. As supply falls, rates rise:
Data fromSignal Maritimeas analysed by The Signal Ocean Platform (weekdays only).
The graph above shows another method to visualise the increase in the number of fixtures indicated above, which occurred on March 11. On day 1, the number of available VLCCs decreased from 71 to 45. On March 12, rates rose from 130 to around 157 WS.
While these dynamics begin in the VLCC vessel segment, they quickly spread to the other dirty vessel classes.
*Data from Signal Maritime as analysed byThe Signal Ocean Platform*
Oil prices continued to fall below March 9 levels. Signal Ocean continued to monitor how the sustained decline reshaped dirty tanker freight rates across vessel classes.
Frequently Asked Questions
What is the dirty tanker freight market? The dirty tanker market covers vessels that transport unrefined crude oil and heavy fuel products. Key vessel classes include VLCCs, Suezmaxes, and Aframaxes, each serving different trade routes and cargo volumes.
Why do oil price drops trigger a surge in VLCC fixtures? When oil prices fall sharply, traders and producers rush to buy and store crude at low prices. This drives a spike in tanker demand — particularly for VLCCs, which are used for large-volume Arabian Gulf to Far East voyages and floating storage.
What does "On Subs" mean in shipping? "On Subs" means a vessel has been placed under contract (subject to conditions) and is temporarily withdrawn from the available supply pool. A sudden rise in "On Subs" VLCCs is a leading indicator of tightening supply and rising freight rates.
How does Signal Ocean track these market movements? Signal Ocean Platform aggregates real-time fixture data, vessel position data, and freight rate signals to give traders and operators a live view of market dynamics across all dirty tanker segments.
For further information, contact the Signal team.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
.webp){kind=small}
.png)
.png)
.png)
.png)
.png)
.png)
.avif)
.avif)
