Security of oil tankers fuels worry
LONDON - Now that OPEC has agreed to raise its crude oil production quotas in hopes of taming high and jittery oil prices, industry experts are growing more concerned about both the capacity and the security of oil tankers, the next link in the supply chain.
The world's tanker fleet is already stretched thin by robust demand for oil, by looming deadlines for the phase-out of single-hull tankers for safety and environmental reasons, and by lengthening backlogs at the shipyards where new tankers are built. It is far from clear, experts say, whether the existing fleet can handle the new production that Saudi Arabia and others have promised in coming months.
"There is just barely enough shipping capacity at these high production levels," said Jeffrey Goetz, head of marine projects and consulting at Poten & Partners, a New York-based energy and ocean transport broker.
Charter rates for tankers, which can be even more volatile than oil prices, have been driven up in recent weeks by the tight market. Shipping costs may now add $3 a barrel to the price of oil delivered to the United States from the Middle East, up from about $2 earlier this year, analysts said.
Tanker security is also a growing issue. Tankers and tanker-loading facilities have already been the targets of attacks by al-Qaida and other anti-Western groups, threatening to disrupt oil supplies and adding to the upward pressure on prices, maritime insurance premiums and tanker charter rates.
Complicating the picture, new security regulations are scheduled to take effect July 1 for all sizable commercial vessels calling at American ports. Most major tanker owners will probably be in compliance in time, shipping experts say, but some smaller operators may not make the deadline. If enforcement of the new rules leaves some tankers excluded from delivering to the United States, it may aggravate the scarcity.
"At no other time in history have all these factors gone in one way, to make the market this tight," said Dragos Rauta, technical director of Intertanko, a trade association for tanker owners.
Some experts say an oil tanker makes an attractive target. "It ticks all the terrorists' boxes by attracting publicity and raising economic concerns," said James Wilkes, a director of Gray Page, a London security consultant for the shipping industry.
What do you think? Leave a comment below.
Sign up for regular Resilience bulletins direct to your email.