Middle East's Oil Producers Go Direct with Tanker Purchases Amid Supply Chain Disruptions

Oil-producing countries in the Middle East are shifting their approach to transportation as conflicts and blockages disrupt supply chains. They're increasingly buying oil tankers directly, a trend that's being driven by the need for immediate access to infrastructure during crises.

ADNOC Logistics & Services (ADNOC L&S), a subsidiary of the UAE's state-owned energy giant ADNOC, has led this change. In July 2023, it acquired five very large crude carriers (VLCCs) from Cyprus-based Frontline for approximately $590 million.

ADNOC also purchased three very large gas carriers (VLGCs) and ordered 25-30 crude, LNG, and LPG tankers from shipyards. This includes second-hand vessels to meet immediate needs while ordering new ships to prepare for future demand.

The trend is expected to open up new markets for South Korean shipbuilders and shipping companies. ADNOC's aggressive fleet expansion could create opportunities for domestic shipping companies as well, with long-term contracts potentially increasing.