Shipping trends for the next five years will be linked to macroeconomic factors driven by the US shale oil revolution, China’s rising demand, and falling prices of crude oil, said the maritime community at Moore Stephens-BNP Paribas Shipping Forum 2015.
Speaking at the forum, Mark Walton, senior economist in BNP Paribas, highlighted that the recent industrial demand in China has been sluggish, which was reflected on historical data of the tight relationship between Chinese industrial growth and crude prices.
He explained that with the typically downward trend of oil prices, Chinese industrial production growth is likely to dip below 10%. So far, Walton observed that over the past year Chinese industrial production has been running at around 7-8% of growth.
“Oil prices are likely to be suppressed by surging US and Middle East oil production. This decline is likely to spill over into other commodity prices as well, such as metals and iron ore,” said Walton.
He attributed the recent oil slump to oversupply from the increased US shale oil production as well as the recovering Middle East production, such as in Libya and Iraq, that boosted the overall global production. Moreover, the Organization of the Petroleum Exporting Countries’ decision not to cut entrenches further aggravated the supply glut situation.
Meanwhile, K Kesavapany, ambassador and governor of Singapore International Foundation (SIF), agreed with Walton on the rise of China and its impact on trade and oil demand.
He viewed that China’s policies and recent actions in the South China Sea posed concerns on sea lanes and airspace access, the right-of-passage, communication, and travel, as well as the ownership of undersea mineral resources.
Kesavapany, the former Singapore Permanent Representative to the United Nations, also pointed out that the rising non-US naval power will have an impact on the development of seaborne trade as well as oil and related industry.