S&P Global —16 August 2024
Daily Update: August 16, 2024
Tanker Markets Navigate Choppy Geopolitical Waters
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
Tensions in the Middle East can generally be divided into two states — bad and worse. Following the assassination of Ismail Haniyeh, a top Hamas leader, in Iran and of Fuad Shukr, a senior Hezbollah commander, in Lebanon, things have taken a definitive turn for the worse. However, tanker freight rates for dirty and clean markets remain largely unaffected.
The terms “dirty” and “clean” do not represent value judgements on the cleanliness or legality of the ships or their crew. Dirty tankers are defined as those carrying crude, fuel oil or other “dirty” products such as vacuum gas oil or dirty condensate. Clean tankers carry light ends such as gasoline, middles distillates or naphtha.
The dirty tanker market typically experiences a lull during the summer, but rates for crude carriers have ticked up in early August. Oil market analysts anticipate an increase in tanker freight demand as winter sets in.
Part of the reason for the muted response to heightened tensions in the region is that so much freight traffic has already been redirected away from the Suez Canal. About 60% of tankers traveling from Europe to locations east of Suez have opted to sail the longer Cape of Good Hope route to avoid the Red Sea due to Houthi attacks on shipping lanes. The Houthis have claimed to attack more than 100 ships in the Red Sea and Gulf of Aden since the Israel-Hamas war began. In addition, any response from Iran or Hezbollah to the assassinations is unlikely to affect oil infrastructure.
"Iran would have little to no strategic gain by purposefully attacking oil infrastructure in the region. That is not to say it won't happen, perhaps by accident or on purpose. But such attacks would spur responses against Iran. And China, an Iranian ally of sorts, would not like to see higher oil prices or supply threatened," said Jim Burkhard, S&P Global Commodity Insights' vice president of oil markets, energy and mobility.
Israel recently issued sanctions against 18 oil tankers that it accuses of transporting Iranian crude for Iran's Quds Force with the revenue from the sales going to fund Hezbollah, Hamas and the Houthis. Data from S&P Global Commodities at Sea suggests that 12 of these 18 tankers have been trading in Iran as well as Russia, Iraq, the United Arab Emirates and other countries. In addition, S&P Global Maritime Intelligence Risk Suite data shows 15 of the 18 ships are confirmed or suspected to have turned off their ship-tracking system during their operations in the past two years. Turning off a ship’s tracking system is a way that tankers can disguise their actual destinations to thwart sanctions.
Rates for tanker freight have remained stable despite unexpectedly low demand from China, in part because the crude tanker fleet has grown only marginally this year. In addition, a portion of the fleet specializes in only moving Russian crude and refined products, thereby tightening supply for other origins.
Today is Friday, August 16, 2024, and here is today’s essential intelligence.
Listen: Exploring The Unprecedented Growth Of Global Solar PV
The Global installed capacity of solar photovoltaics has experienced remarkable growth in recent years as countries work towards achieving their decarbonization goals. This surge in solar power has led to an increasing presence of this technology in electricity systems worldwide. In this episode of the Platts Future Energy Podcast, solar market reporter Lena Dias Martins and Associate Director for Solar Research Josefin Berg discuss the growth of solar globally, installation forecasts and how this technology is impacting decarbonising electricity systems.
—Listen and subscribe to the podcast from S&P Global Commodity Insights
What The Loper Decision May Mean For US Public Finance
The recent United States Supreme Court decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Dept. of Commerce (the Loper decision) overturned a 40-year precedent commonly referred to as the Chevron Doctrine. While the magnitude of the ruling will take years to unfold, S&P Global Ratings believes the Loper decision will likely influence the regulatory and policy landscape for US public finance issuers and has several potential credit implications.
—Read the article from S&P Global Ratings
2023 SPIVA Institutional Scorecard: SMAs/Wrap Accounts Are Here
First published in 2002, the S&P Indices versus Active (SPIVA®) US Scorecard measures the performance of active mutual fund managers against their respective S&P DJI benchmarks over various time horizons and across asset classes. In 2015, S&P Dow Jones Indices extended the analysis to include institutional accounts to understand how institutional asset owners fared versus mutual funds against their respective benchmarks and the impact of fees on performance.
—Read the article from S&P Dow Jones Indices
Demand From Key Buyers, Lower Tariffs Push Up Russian Thermal Coal Exports
Russian thermal coal exports increased in the May-July period from the previous three-month period (February-April) driven by an increase in imports from major consumers in the Asia-Pacific and the Mediterranean regions coupled with an export tariff reduction by the Russian government at the start of May. In May-July, Russia exported 37.3 million mt thermal coal compared with 29.4 million mt in the February-April period, S&P Global Commodities at Sea data showed. Russian thermal coal exports during the May-July period were higher than the 36.7 million mt it exported in the corresponding period of 2023, according to the CAS data.
—Read the article from S&P Global Commodity Insights
Oil Demand Seeing 'Major Deceleration' Led By China: IEA
The world is seeing a major deceleration in oil demand growth led by China, with inventories set to rise next year even if OPEC+ were to postpone its plans to ease output cuts, the International Energy Agency said Aug. 13. The IEA, in its monthly oil market report, reiterated the impact of China's slowdown, with the US and particularly its service sector driving demand growth.
—Read the article from S&P Global Commodity Insights
Listen: How Tech Giant HP Is Working To Close The Digital Divide
Even as society becomes increasingly reliant on computers and digital technologies, billions of people around the world lack access to the internet and related services. And this matters because this lack of access can have a negative impact on the economy and exacerbate existing inequalities, particularly in developing countries.
—Listen and subscribe to the podcast from S&P Global Sustainable1
Beyond ESG With Scaling Capital For The Energy Transition (Aug. 21, 2024)
Clean tech is key to scaling the energy transition, but its adoption remains stifled by the deployment of fossil fuel infrastructure far from the end of its economically useful life. How can investors and companies finance this shift, while the threat of early retirement of assets still looms large?
—Register for the webinar from S&P Global Sustainable1