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David Martinez Senior Director Commodity Solutions, Crude and Refined S&P Global Platts
The energy industry is slowly but surely recovering from the shock felt during the first half of the year. Global inventory levels continued to decline in the third quarter thanks to the increase in demand for refined products and refinery runs. But the recovery is not taking place evenly across all regions and sector. The airline industry and the demand for jet fuel, for example,are lagging. And the economic impact of the pandemic has triggered shifts in supply and demand patterns that are likely to have lasting effects. For instance, there is now a higher probability or risk of refinery closures in the U.S. and Western Europe than in the rest of the world. At the same time, investment in new capacity continues in the Middle East and China.
One of the main topics of conversation during the second half of 2020 seems to be the “new normal”. Across most industry sectors and commodity markets, strategists and analysts are trying to see beyond the horizon to envision the new landscape.
The energy industry is not sitting idle, adapting to survive and looking for new opportunities. Traditional business models are being challenged,and efficiency is the new favourite buzzword of industry leaders. The so-called energy transition appears to be the primary beneficiary. A convergence of environmental concerns, technological innovation, and the need to ride the economic downturn while protecting operating margins, is encouraging companies to restructure, “rebalance”resources, and fund new businesses. Di-vestments, job cuts and mergers up and down the energy supply chain are producing headlines almost daily.
It is difficult to make long-term investment decisions with confidence when so much is in flux. In this edition of the Fujairah magazine, we highlight the ageing tanker fleet as one example. Higher spot rates for tankers due to the need for storage reduced the rate of scrapping old tankers. The sale of second-hand ships has taken centre stage while orders for newbuilds has slowed down.
While the industry adapts to new realities, it will continue to rely on existing businesses to carry them over the trough. The demand for reliable infrastructure underpinning trading hubs will only become greater and will play a key role in helping markets transition and adapt to new models.
Against this backdrop, Platts and the Port of Fujairah are powering ahead with the development of the commodity markets in the region. Building on the groundwork laid by our cooperation over the last few years, we are working on new and exciting initiatives.
Or our Dubai and Oman Crude price benchmarks or any other part of our Oil, LNG or Shipping services please contact our team at support@platts.com
