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The impact of crude oil price on the tanker market

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  • Wenming Shi
  • Zhongzhi Yang
  • Kevin X. Li

Abstract

The demand for crude oil transport services is a derived demand, which is dependent on international trade of crude oil and crude oil carriers transport crude oil from producer regions to consumer regions. The purpose of this study is to investigate the relationship between fluctuations in oil prices and the freight market (hereinafter referred to as ‘the tanker market’) using a structural vector autoregressive (SVAR) model. Referring to Kilian and Park's method of structural decomposition of fluctuations in crude oil prices, crude oil price shocks are classified into crude oil supply shocks and crude oil non-supply shocks in this study. Also, the response of the tanker market to different shocks is examined using the impulse response analysis. The empirical results provide evidence that crude oil supply shocks have significant effects on the contemporaneous tanker market. However, the impact of crude oil non-supply shocks is insignificant. In addition, the accumulated responses of the tanker market to crude oil non-supply shocks and crude oil supply shocks are positive but they are far lower than other shocks to the tanker market. Empirical results from this research are consistent with the fact of high crude oil tanker freight rates but low profits for tanker operators.

Suggested Citation

  • Wenming Shi & Zhongzhi Yang & Kevin X. Li, 2013. "The impact of crude oil price on the tanker market," Maritime Policy & Management, Taylor & Francis Journals, vol. 40(4), pages 309-322, July.
    • Handle: RePEc:taf:marpmg:v:40:y:2013:i:4:p:309-322
    DOI: 10.1080/03088839.2013.777981
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    5. Sun, Xiaolin & Haralambides, Hercules & Liu, Hailong, 2019. "Dynamic spillover effects among derivative markets in tanker shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 122(C), pages 384-409.
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    9. Maitra, Debasish & Chandra, Saurabh & Dash, Saumya Ranjan, 2020. "Liner shipping industry and oil price volatility: Dynamic connectedness and portfolio diversification," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 138(C).
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    13. Wenming Shi & Kevin X. Li, 2017. "Themes and tools of maritime transport research during 2000-2014," Maritime Policy & Management, Taylor & Francis Journals, vol. 44(2), pages 151-169, February.
    14. Shi, Wenming & Gong, Yuting & Yin, Jingbo & Nguyen, Son & Liu, Qian, 2022. "Determinants of dynamic dependence between the crude oil and tanker freight markets: A mixed-frequency data sampling copula model," Energy, Elsevier, vol. 254(PB).
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    16. Meng, Bin & Wei, Bangguo & Yang, Mo & Kuang, Haibo, 2023. "Measuring the time-frequency spillover effect among carbon markets and shipping energy markets: A global perspective," Energy Economics, Elsevier, vol. 128(C).
    17. Bai, Xiwen & Lam, Jasmine Siu Lee, 2019. "A copula-GARCH approach for analyzing dynamic conditional dependency structure between liquefied petroleum gas freight rate, product price arbitrage and crude oil price," Energy Economics, Elsevier, vol. 78(C), pages 412-427.
    18. Zhang, Yi, 2018. "Investigating dependencies among oil price and tanker market variables by copula-based multivariate models," Energy, Elsevier, vol. 161(C), pages 435-446.
    19. Monge, Manuel & Romero Rojo, María Fátima & Gil-Alana, Luis Alberiko, 2023. "The impact of geopolitical risk on the behavior of oil prices and freight rates," Energy, Elsevier, vol. 269(C).
    20. Naixia Mou & Yanxin Xie & Tengfei Yang & Hengcai Zhang & Yoo Ri Kim, 2019. "The Impact of Slumping Oil Price on the Situation of Tanker Shipping along the Maritime Silk Road," Sustainability, MDPI, vol. 11(17), pages 1-16, September.

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