COVID-19 and the Energy Trade: Evidence from Tanker Trade Routes
30 Pages Posted: 21 Mar 2021
Date Written: March 19, 2021
We employ a cointegration setup to explore route-specific off-equilibrium deviations related to COVID-19 that have affected clean (petroleum products) and dirty (crude oil) tanker freight rates, over and above the expected macroeconomic reactions. We find that the additional deviation caused by COVID-19 is route-specific. In particular, deviation caused by COVID-19 is found to be more significant for clean tankers, given that these products are more reliant on economic developments as a result of their uses. The clean tanker impact is more evident in Japan-related routes, while no specific pattern can be extracted with regards to the additional off-equilibrium COVID-19 deviation for dirty tanker routes.
Keywords: shipping, tanker markets, freight rates, COVID-19, coronavirus
JEL Classification: G11, G12, G13, G20
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