The tanker market has been in the doldrums for some time now, and times have been extremely tough for the crude carriers.
However, industry major DHT Holdings expects the times to take a turn for the better due to four key reasons.
Firstly, global demand looks healthy and steady with 1.3 million barrels per day expected for the remainder of the year and 1.2 million barrels per day for 2019.
Secondly, the inventory drawdown gain in the second half and likely in the last quarter.
Thirdly, the fleet growth has been negative so far this year.
Fourthly, the orderbook stands at 14 percent of the total fleet, and this should be compared with 24 percent of the fleet in excess of 15 years of age.
Speaking on the geopolitical situation and tensions between China and the United States and their potential impact on the freight markets, Harfjeld said that some 375,000 barrels per day of U.S. shale might be lost from this trade.
"Whereas this sounds as a negative, we see signs of the North Sea and South America stepping into fill the void, and these trades are also VLCC trades," he added.
As these trades are of similar length as the U.S. export trades, the impact on VLCCs is predicted to be neutral.
The U.S. has made a stronger grasp of other markets such as South Korea, with refiners increasing import of U.S. shale that has resulted in 4 to 5 VLCC cargoes per month. India is also increasing U.S. shale purchases, reported to be about 10 million barrels for August.
What is more, the U.S. shale could also divert sales to Europe to partly replace loss of Iranian barrels and likely in smaller ships.
"And China is expanding its refining capacity this year and a total of 1.2 million barrels per day of new capacity is due to come on stream later this year. Combined with the domestic production in decline, we expect imports to bounce back once the maintenance season ends later this quarter,” he pointed out.
"And lastly, there has been further consolidation in the freight markets. And we welcome stronger and well behaved players."
DHT Holdings reported a net loss for the second quarter of 2018 worth US$28.2 million and a net loss of US$37.4 million for the first half of the year.