Paradoxically, the tanker segment of the global oil and gas industry is booming as most of the sector struggles, and that boom will likely continue as long as crude production continues to surge.

The boom’s metric is the average day rate for a Very Large Crude Carrier (VLCC). In an April 1 report, GlobalData analyst Ravindra Puranik said day rates soared from an average of $22,500 on Feb. 3 to $175,000 on March 12. It’s because onshore storage is limited and rapidly filling up.

“Tankers function as a safety valve and floating storage could reach unprecedented levels,” Erik Broekhuizen, global manager of tanker research and consulting for Poten & Partners Inc., said during an April 2 webinar. “Over the next one to two months, we expect to see continued rate volatility as oil supply and demand try to find an equilibrium in a highly uncertain market. Initially, all demand will continue its free fall while supply is still ramping up.”

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