Navios Acquisition’s Crude Oil Markets—US and China Production

Since the end of 2008, US crude production increased by ~73% to 8.6 million barrels per day (or bpd) in July. Navios Maritime Acquisition’s (NNA) management revealed that this was because US crude oil exports were prohibited by law. Since 2004, the US increased its total product exports by 330% to ~4.1 million bpd.

US Gulf refineries benefit from inexpensive domestic crude and natural gas supplies. They found natural export markets in Mexico, Latin America, and Africa. The US product imports declined over the past couple of years. The product exports continue to come from further away. This adds to product tankers’ ton miles. The fundamentals of product tanker trading patterns continue to adjust in relation to these changes.

China
China is the world’s second largest consumer of oil. It imports more than half of its requirements. Chinese imports have more than doubled since January 2009. On a per capita basis, European usage is 3.5x China’s usage. US usage is 7.5x China’s usage.

In October, China imported 5.7 million bpd of crude oil. Current projections show that China’s crude oil imports will likely surpass the US next year. China’s imports will grow to ~14 million bpd by 2035. China will continue to urbanize, industrialize, and motorize its economy.

In terms of ton miles, the number of Very Large Crude Carriers (or VLCCs)—utilized for crude movement from West Africa and South America to China—is the same as movement from the Arabian Gulf. This is despite the Gulf shipping 1.9x more oil to China.

VLCCs’ demand is expected to increase. China will import more crude from Venezuela, Brazil, and West Africa. Indian companies will also increase oil supplies from Brazil. This will replace existing Iranian supplies.

These factors led to increased VLCC ton-mile demand. Distance has been a key driver for tanker demand—despite a marginal increase in annual oil demand.

（ marketrealist.com  Edited by Topco)