Likely Tanker Demand Increase

If OPEC increases production 500,000 barrels per day in the run-up to Nov. 1st, Saudi Arabia and Kuwait's allotment combined is 400,000 bpd. The remaining 100,000 bpd is Venezuela's. All the other OPEC-10 countries have no commitment but to stay flat.

400,000 barrels is one VLCC leaving every 5 days. With the 38-day round trip from the Gulf to Asia, this creates the need for a maximum of 8 VLCCs in addition to what are being currently employed.

But there is a catch. The UAE has a planned 600,000 bpd decrease in production due to maintenance scheduled for November. It is unclear how long this outage will last, but the expectation would be for only one month.

Imarex Freight Futures for the TD3 route spiked to WS79 from WS56 on Deutsche Bank's recommendation. Seasonal factors may also be playing a part in tanker rates bouncing off their lows. But the need for only 8 more supertankers is unlikely to push these rates much higher than where they were in 2006.