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Oil is the world’s major energy resource and is normally produced far from where it’s refined and consumed. Because of this, tankers and pipelines are critical infrastructure in the energy value chain. Generally speaking, tankers are used for trade between regions, while pipelines are used within a given region.

A very simplified version of the energy value chain is illustrated below. It has three main steps: exploration/production, refining and consumption. Tanker shipping connects these three steps.

There are two types of oil tankers: Crude carriers for unrefined products and product carriers for refined products.

Crude tankers are mainly used for the deep sea transport of crude oil from production sites to refineries. They range in size from 55,000 DWT* up to around 450,000 DWT. The main trading routes are from the production areas in the Arabian Gulf and West Africa to Asia, Europe and the USA.

Product tankers are used to transport refined oil products (gasoline, diesel, kerosene, jet or fuel oil) to the market. They range in size from 5,000 DWT to around 80,000 DWT. One traditional trading route for product tankers is between North America and Europe, where gasoline is carried to the US and diesel fuel is transported back to Europe.

*DWT = deadweight, which is the maximum weight of cargo, bunkers and stores that a vessel can carry.

Tankers are often compared to taxis, as tankers take on new assignments with new customers whenever they are available – unlike container ships, which are more like buses travelling on a fixed schedule. The nature of the tanker business is characterised by a trading mindset involving 3 parties: the charterer, the shipowner and the broker.
The charterer of the vessel has cargo that needs to be shipped as safely, quickly and affordably as possible.
The shipowner owns and operates the vessel and wants to maximise freight but with a reliable and solvent customers and at best possible contract terms.
The broker bridges the gap between the charterer and the shipowner by using market knowledge to guide both parties.

Energy transport is driven by global economic growth and dislocation of consumption and production. This is reflected in cyclical freight rates that vary in accordance with vessel supply and demand.
This article comes from MAERSK TANKERS edit released