Abstract
This paper studies the dynamics between tanker freight rate and crude oil production levels. Making use of the Toda and Yamamoto (1995) procedure, it is tested for the (non-)existence of Granger (1969) causal relationships between the two variables. Over the sample period from 1998 to 2014, the results suggest that past information of crude oil production levels uni-directionally helps to predict current tanker freight rate levels. This holds both for aggregated global data and for specific trading routes. Moreover, making use of breakpoint analysis, it is found that this causal relationship is only valid until 2009, since when the global tanker shipping market suffers strongly from excess tonnage capacity. During periods of low earnings in the tanker market, freight rate levels are not impacted by changes in crude oil production. At the practical level, the findings imply that, depending on the state of the freight market, ship owners and operators may improve chartering decision-making by monitoring physical crude oil production volumes.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
