Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229157
Authors: 
Kilian, Lutz
Nomikos, Nikos K.
Zhou, Xiaoqing
Year of Publication: 
2020
Series/Report no.: 
CFS Working Paper Series No. 648
Abstract: 
Using a novel dataset, we develop a structural model of the Very Large Crude Carrier (VLCC) market between the Arabian Gulf and the Far East. We study how fluctuations in oil tanker rates, oil exports, shipowner profits, and bunker fuel prices are determined by shocks to the supply and demand for oil tankers, to the utilization of tankers, and to the cost of operating tankers, including bunker fuel costs. Our analysis shows that time charter rates are largely unresponsive to tanker cost shocks. In response to higher costs, voyage profits decline, as cost shocks are only partially passed on to round-trip voyage rates. Oil exports from the Arabian Gulf also decline, reflecting lower demand for VLCCs. Positive utilization shocks are associated with higher profits, a slight increase in time charter rates and lower fuel prices and oil export volumes. Tanker supply and tanker demand shocks have persistent effects on time charter rates, round-trip voyage rates, the volume of oil exports, fuel prices, and profits with the expected sign.
Subjects: 
Shipping
VLCC
crude oil
bunker fuel
tanker
voyage
time charter
profits
exports
passthrough
JEL: 
Q43
R41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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