Oil Producers Buy Tankers Directly to Navigate Blocked Routes

Oil-producing nations, particularly those battling frequent blockages in key shipping routes like the Strait of Hormuz and the Red Sea, are increasingly buying oil tankers directly. This trend marks a departure from the traditional approach where producers sold crude and gas while buyers handled transportation. Supply chain disruptions during conflicts have led to this shift, prompting the acquisition of "strategic vessels" to ensure immediate response during crises.

ADNOC Logistics & Services, a subsidiary of the UAE's ADNOC, recently purchased five very large crude carriers (VLCCs) from Cyprus-based Frontline for around 590 million dollars (850 billion Korean won). They also acquired three very large gas carriers (VLGCs) and have placed orders for 25–30 new crude, LNG, and LPG tankers. ADNOC L&S has also chartered 25 crude carriers from South Korea's Sinokor Merchant Marine, with approximately 15 operating as "shuttle vessels" to transport crude from riskier areas to safer storage hubs.

This reflects the growing demand for short-distance transport to move oil from high-risk zones to secure storage. ADNOC's fleet expansion is driven by a shortage of tankers, with low freight rates and uncertain oil demand delaying new orders. As Middle Eastern oil producers face increasing risks, they are rushing to secure second-hand vessels to meet immediate needs while preparing for future demand.

The competition among producers to secure strategic vessels could benefit South Korean shipbuilding, potentially opening new markets for the industry.