My eye was caught by a recent article: "Tanker Sector May Be Over the Worst", quoting a Norwegian bank's analysis that the tanker market, including VLCCs, suezmaxes, aframaxes, panamaxes and medium range clean product tankers, has bottomed out.  As Lawrence Peter "Yogi" Berra, a great contemporary philosopher, reportedly said, "It's not good to make predictions, especially about the future".  My reading is that actual crude oil production will fall in the second half of 2012, and that this will reduce the demand for tankers, and therefore the all-important tanker rates.

There is, however, another reason to be pessimistic, and that is the state of the world economy.  Yogi notwithstanding, I predict that the euro will eventually either be dismantled, or will be reduced to a smaller core area.  There is little reason to believe that the European powers are anywhere near to curing the broken single currency experiment.  It is increasingly obvious that the European crisis is at the heart of the global economic recession, which is going to be longer and probably deeper than we are presently willing to admit.  It is clear that the fate of the euro will be decided in Spain and Italy, and perhaps elsewhere - but not in Greece at all.  I do not believe that Germany's leaders, who seem to have been left in charge of the entire crisis, are now willing to take dramatic steps toward banking, political and fiscal union, just to save the euro.

In face of the growing economic crisis, it needs to be said that it is no longer specifically restricted to Europe.  It is a world crisis, but one profoundly influenced by the European malady.

If we are to take a more optimistic view, it is that the bankers are correct; fleet growth will continue to drop in absolute terms in 2014 and 2015, because of scrapping.  The crude tanker order book as a percentage of the entire fleet is half of what it was in 2009 - tumbling to 25% from 51%.  Let's not forget the greatly reduced lending market.

It is becoming clear that German policy is to enlarge the control wielded by the European Central Bank, but that this will not institutionalize financial integration, and certainly not political integration.  Resistance to German leadership, led by France, which, after all, considers the word "resistance" to have profound historic significance when it comes to things German, is rapidly growing under the leadership of president Hollande.  This means that we are not going to see real reform any time soon.

Sentiment is an important thing, and right now, it is not good.  Mr. Berra would agree that if business is bad now, it's likely to stay that way for some time to come.  So will the tanker market.

Clay Maitland

Fouding Chairman of NAMEPA and Managing Partner of International Registries

This article has been initially published at www.claymaitland.com