Euronav’s rise in profits offset by low rates for large

Belgian oil tanker and storage operator Euronav reported sharply higher quarterly profits on Thursday, but despite a recovery in the freight market, prices for very large crude carriers (VLCCs) remained low, sending its shares down more than 4 %.

“Management has good reason to be more optimistic for the winter season,” ING analyst Quirijn Mulder said after the group, which provides crude oil transportation and storage services, said that freight rates had improved significantly since March.

Chief executive Hugo De Stoop said in a statement that recent trade data, including China’s return to crude supply, vessel supply measures and improved oil supply, had supported a recovery in freight markets.

Under pressure to pump more crude oil as Western sanctions enacted in response to the war in Ukraine cut Russian oil exports, the Organization of the Petroleum Exporting Countries and its allies are set to raise their production target by 100,000 barrels per day from September. Read the full story

Euronav said it expected the diversification of countries’ crude suppliers due to conflict dislocations to lead to longer ton-miles – an industry measure incorporating volumes and distance, absorbing a additional ship capacity.

Global oil demand growth is expected to be met by non-OPEC producers in the Atlantic Basin, the company added.

The proportionate profit before interest, taxes, depreciation and amortization (EBITDA) of the Antwerp-based group was $74.9 million in the second quarter, compared to $22.6 million a year earlier.

Its net loss for the period narrowed to $4.9 million from a loss of $89.7 million last year.

ING’s Mulder reported that Euronav’s VLCC fleet had earned about $12,700 a day so far in the third quarter, about 30% below the previous quarter’s level.

“Suezmax is quite good,” he added. “However, in the short term, this helps marginally as Euronav is primarily a VLCC player.”

Olivier Vandewoude, an analyst at KBC Securities, also pointed to an unresolved situation with Euronav’s biggest shareholder, Compagnie Maritime Belge, which is seeking to block a proposed merger with Frontline, its Oslo-listed rival.

“We believe the merger has a good chance of succeeding, but a stubborn family could lead to a long and bumpy process,” he said.

(Report by Juliette Portala, edited by Milla Nissi and David Evans)

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