The most players in the oil industry is struggling to stay afloat due to the low prices and oversupply of oil, one segment of the industry seems to be gaining from all this turmoil.

In recent years with oversupply of oil, the oil tankers companies that carry oil and petroleum products have benefited.

The low oil prices haven’t been a negative, says Nikolas Tsakos, chairman of Intertanko, the International Association of Independent Tanker Owners, and the CEO of Greece-listed Tsakos Energy Navigation (TEN).

“The lower the price of oil, the more demand for our services. So any price under $60 is a comfortable level for a lot of demand,” he told CNBC’s “Squawk Box.” “We’ve seen a very good market from the end of 2014, the whole of 2015 and this year the market has been positive, however, not to the levels of 2015,” he said.

Demand for oil rises as it becomes less expensive. Companies involved in transporting the oil can see benefits from the lowered prices even as it may not be beneficial to the producers.

His company has seen a large bump up in profit, noted Tsakos. Totting up a full year net profit of $158.2 million, up nearly five times on-year, its net profit rose nearly three times on-year to $39.6 million in the fourth quarter of 2015, TEN said. The company further said that 98 percent of their fleet capacity – an average of 48.6 vessels, was made in the fourth quarter.

According to the Lloyds List Intelligence website the Baltic Exchange Dirty Tanker Index which is the industry benchmark, was hovering around 723 on Wednesday. That figure, while being significantly off the peak of around 1,016 hat was touched at the start of 2016, was still solidly above the low levels of below 600 touched in 2013.

Before recovering to around $50 a barrel in recent days, oil prices have tumbled from levels over $100 a barrel in mid-2014 to as low as under $30 a barrel earlier this year.’

Tsakos said that new vessel supply will drop off in the following years even though he predicts that more boats will be coming into the market for the rest of this year. As oil remains under the $75 a barrel psychological demand level, rates will come back up after early 2017, he forecasts.

As it pursues ton-mile growth, the industry is also benefiting from sea changes in oil routes.

“We did not expect the U.S. [to go] from a net importer of oil,” to an exporter, Tsakos said.

“We were building ships to service imports in the U.S. and now the same ships are starting taking exports from the U.S.” he added.

He said that taking oil from West Africa to the U.S. east coast, which is the traditional route, has also unwound.

“That was a traditional trade since the inception of the tanker market in the last 50 years. This was reversed in 2014, which has created much more ton miles for us. So we’re moving the same oil. Instead of a two-week voyage from West Africa to Philadelphia, we’re going from West Africa to China and India,” he said.

While cheaper oil drives up demand it also drives down fuel costs, and that’s another positive for the global fleet. The current cheap fuel environment has translated into a tailwind for earnings as fuel is a top expense for ship operators like other modes of transportation.

(Adapted from CNBC)

Categories: Economy & Finance, Strategy