Nordic American Tankers Limited (NYSE:NAT) - Shortfall of Middle East oil supply. Some observations.

Hamilton, Bermuda - September 16, 2019

We have assessed the situation following the attack on Saudi oil installations at the end of last week. About 50 % of Saudi oil production has been impacted. This is about 5-6 mill barrels a day which need to be sourced from elsewhere. This is more than 5% of world oil consumption.

An analyst of Arctic, a Norwegian based investment banking and securities firm, writes as follows this weekend:

“This is a bullish turn for the tanker market - period. Forget talk of lower Middle East flows depressing tanker demand. We believe refinery purchasing managers now are thinking inventory building and security of supply. Oil will be harder to come by and will have to travel farther from US, Brazil and Russia and elsewhere. In such a scenario, the opportunity cost of being uncovered on transport is bound to rise, hence pushing rates higher and available tonnage lower.”

There are many observers having a view on the matter at hand. A common denominator, which is also our experience, is that political uncertainty of this nature is normally good for the market. We believe that the short term impact will be positive – as the amount of transportation work – so called tonne- mile – can be expected to increase.

The shortfall of oil exportation from the Middle East to the Far East can be expected to be taken up by exports from suppliers further away such the US, Brazil, the North Sea, West Africa and other locations. This is positive for our uniform suezmax fleet.

In our group, we have experts who have been involved in the tanker industry and economics for several decades without claiming to know the “truth” in all respects.

However, it remains a fact that what we have seen is a very important development that will probably affect our industry – as far as we can see – positively.

Supply and demand are always decisive.

Nordic American Tanker Shipping Ltd., press release