LectureSHIP: Oil Tankers

Typically, road and air transportation consume more than half of the annual oil production globally. In a mid-pandemic world, however, both air and car travel has significantly declined—with a full recovery barely on the horizon. There is no denying that this reduced demand for crude oil production is hurting the tanker market. Tanker owners are relying  on a spike in demand going into 2021 when traveling hopefully will return to more normal levels. 

The question then becomes, however, what is normal? Are we talking about a pre-pandemic normal or a new normal? And if it is a new normal, what will this new normal look like? To explore what the new normal may mean for shipping, you need to start with oil, as it’s the most beleaguered of the commodities. Oil consumption waned prior to COVID-19, as the world increasingly embraces Environmental, Social, and Corporate Governance (ESG) considerations, as well as sustainable investing. Big oil and automakers are pumping hundreds of billions into renewables and electric vehicles, respectively, heralding the beginning of the end for fossil fuels.

Many of us have been working from home for much of 2020 and we’ve come to realize that video conferencing is not only effective, but also efficient; much of our daily travel was probably non-essential. We’re now starting to question the norm of a daily commute to sit in front of a computer or jumping on a plane to meet with someone then flying right back. There is no denying that face-to-face meetings are important, but fewer would suffice. With that, we are beginning to differentiate between essential and non-essential meetings and travel. Some predict that as much as 50% of business travel and over 30% of days in the office will disappear. The winds of change are shaping the new normal.

This demand shockwave has also changed the global refining landscape insofar as it is shaped by decisions in the West—Europe and the United States to close refineries, while Asia and the Middle East continue to expand their refining capacity. The shift in trade patterns is expected to add ton-miles, which will likely benefit the tanker industries, but the radically reduced consumption will mean a reduction in the global tanker fleet. We believe this Darwinian evolution of the survival of the fittest will present Yieldstreet Marine with opportunities to fund distressed asset opportunities for astute tanker owners capable of fixing and operating their ships profitably.

Nature: How the pandemic might play out in 2021 and beyond, Megan Scudellari.
Reuters: Analysis of 29 global automakers
Business Insider: Bill Gates says in-person meetings aren’t the ‘gold standard’ anymore and that 50% of business travel will go away even after pandemic
Poten & Partners: Poten Tanker Opinion

Sign up for a Yieldstreet account or follow us on social to keep up with the latest news, product updates, and content. If you are in need of liquidity, please contact our originations team at [email protected] or submit an application here: Raise Capital.

How helpful is this content?

Share this article:

Join a community of 350,000+ members

  • Gain access to unique offerings previously reserved for the ultra-wealthy

  • Customize your portfolio for income, growth, or a balance of both

  • Get started today and earn an average IRR of over 8%

What investors are saying about Yieldstreet

Apr 2022

The due diligence, risk management, and product education materials are thorough, excellent, and easy to use and understand.

Manoj J
Member since 2019
Apr 2022

Excellent and unique selections that I can't find elsewhere.

Jonathan S
Member since 2019
Apr 2022

The platform delivers in a very concise manner. Easy to get a clear understanding at a glance from the web or mobile app.

Tim S
Member since 2021
The testimonials presented on this page have been provided by actual investors in Yieldstreet funds without compensation. Yieldstreet has selected the testimonials, and certain testimonials have been edited to remove personally identifiable information and for brevity. Testimonials were not selected based on objective or random criteria, but rather were selected based on Yieldstreet's understanding of its relationship with the providers of the testimonials. The uncompensated testimonials presented here may not be representative of other investors' experiences, and there can be no guarantee that investors will experience future performance or success consistent with the testimonials presented.

The Yield

Our weekly podcast providing ideas about how to make money work for you and bring you closer to your dreams.

Since inception, over $2.5B has been invested on Yieldstreet

Join today for free to access alternative investment opportunities.