Oil and gas prices have fallen by more than half over the past year as a consequence of lower demand, weakening economic growth in some major economies, over supply, and increased shale oil production in the United States. As a consequence, offshore oil and gas exploration and exploitation has slowed down and there is lower demand for oil and gas tankers to shift cargoes of crude oil, petroleum products and liquid petroleum and natural gas (LPG and LNG).

The shipping analysts, Clarksons, have recently estimated that daily charter rates for LNG tankers have fallen from US$90,000 (S$121,270) in 2013 to US$60,000 at present.

While it is mainly tankers that are affected, the Maersk container-shipping group has warned that global trade growth could slow this year in spite of low oil prices as Chinese, Brazilian and Russian economies turn in disappointing performances leading to lower demand for container shipping services.

… Sam Bateman is an adviser to the Maritime Security Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore. He is a former Australian naval commodore with research interests in good order at sea. This commentary first appeared in RSIS Commentaries.